Iceland: Selected Issues

International Monetary Fund

No 2007/296, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper estimates the gap between the real effective exchange rate (REER) and its equilibrium (medium-term) value. The paper explores certain features of fiscal policy in Iceland, and examines various aspects of fiscal frameworks in other European countries that are possibly worthy of emulation. It provides a detailed summary of the key issues affecting fiscal policy in Iceland. It argues that political economy factors lead to procyclical fiscal trends, and this is exacerbated by macroeconomic volatility. The paper also provides an overview of the structure of the banking sector of Iceland.

Keywords: ISCR; CR; ES approach; Iceland; monetary policy transmission mechanism; norm decrease; adjustment change; carry trade; expenditure ceiling; interest rate channel; Currencies; Real effective exchange rates; Trade balance; Global; Europe; Baltics; Asia and Pacific (search for similar items in EconPapers)
Pages: 44
Date: 2007-08-29
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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