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Monetary Policy and Inflation-Output Variability in Sri Lanka: Lessons for Developing Economies

Kesavarajah Mayandy and Paul Middleditch ()

Economics Discussion Paper Series from Economics, The University of Manchester

Abstract: This paper examines the impact of monetary policy on the inflation-output variability trade-off for Sri Lanka, drawing monetary policy lessons for developing economies. We examine how this trade-off has changed across different monetary policy episodes, and investigate the persistence of the variability of inflation and output after supply and demand shocks. Finally we explore the contribution of monetary policy to macroeconomic performance more generally. Learning from the experience of Sri Lanka, our findings suggest that more recently formed central banks should focus on inflation variability, especially where the impact of demand and supply shocks are less persistent.

JEL-codes: E52 E58 O23 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-mon
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Journal Article: Monetary policy and inflation–output variability in Sri Lanka: Lessons for developing economies (2022) Downloads
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