MPM – The Magyar Nemzeti Bank’s monetary policy model

Ágnes Horváth (), Csaba Köber () and Katalin Szilágyi ()
Additional contact information
Ágnes Horváth: Magyar Nemzeti Bank (central bank of Hungary)
Csaba Köber: Magyar Nemzeti Bank (central bank of Hungary)
Katalin Szilágyi: Magyar Nemzeti Bank (central bank of Hungary)

MNB Bulletin (discontinued), 2011, vol. 6, issue 2, 18-24

Abstract: March 2011 marked the introduction of the MNB’s Monetary Policy Model (MPM), representing a paradigm shift in both inflation forecasting and monetary policy decision support. In contrast to the previous conditional projections, the MPM offers an endogenous definition for both the policy rate and the exchange rate. Given the forward-looking nature of this model, expectations by economic agents play a key role in monetary transmission; therefore, instead of one-off interest rate measures, the achievement of inflation target is guaranteed by the entire interest rate path over the forecast horizon. In the following, we discuss the underlying structure and logic behind the MPM, as well as the functioning of key behavioural equations, while also examining how the channels of monetary transmission appear in the model. We also present our motivations regarding the model switch and review how developing and operating this new tool have changed our current processes.

Keywords: forecasting; monetary policy; inflation targeting; macroeconomic model. (search for similar items in EconPapers)
JEL-codes: C53 E27 E32 E37 E47 E52 E58 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.mnb.hu/letoltes/horvath-kober-szilagyi-eng.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mnb:bullet:v:6:y:2011:i:2:p:18-24

Access Statistics for this article

More articles in MNB Bulletin (discontinued) from Magyar Nemzeti Bank (Central Bank of Hungary) Contact information at EDIRC.
Bibliographic data for series maintained by Maja Bajcsy ( this e-mail address is bad, please contact ).