A Practical Model-Based Approach to Monetary Policy Analysis: Overview
This paper motivates and describes an approach to forecasting and monetary policy analysis based on the use of a simple structural macroeconomic model, along the lines of those in use in a number of central banks. It contrasts this approach with financial programming and its emphasis on monetary aggregates, as well as with more econometrically driven analyses. It presents illustrative results from an application to Canada. A companion paper provides a more detailed how-to guide and introduces a set of tools designed to facilitate this approach.More fundamentally, purely empirically based models do not permit the analysis of changes in policy rules or ... For purposes of policy analysis, the model must first of all be identified, in that each of the equations has a clear economic interpretation. ... The ahow-to-guidea contains more nuts-and bolts details for modelers.
| Title | : | A Practical Model-Based Approach to Monetary Policy Analysis: Overview |
| Author | : | Mr. Douglas Laxton, Mr. Andrew Berg, Mr. Philippe D Karam |
| Publisher | : | International Monetary Fund - 2006-03-01 |
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