Description |
1 online resource (43 pages) |
Series |
IMF working paper ; WP/14/33 |
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IMF working paper ; WP/14/33.
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Contents |
Cover; Contents; I. Introduction; II. The Model Economy; A. Households; B. Investment and capital goods; C. Domestic production; D. Import goods retailers; E. Commodity and Foreign sectors; F. Monetary and Fiscal Policies; III. Calibration And Simulations; A. Imperfect Credibility on the Monetary and Fiscal Rules; B. The role of monetary policy transparency; C. Credible and transparent monetary policy; D. Credible and transparent monetary policy and transparent fiscal policy; IV. Empirical Evidence; V. Conclusions; References; Tables; Table 1. Baseline Parameterization; Appendix |
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Appendix A: Simulation Under Imperfect CredibilityFigures; Figure 1. Market beliefs to a commodity price shock under perfect and imperfect credibility; Figure 2. Impulse-response to a commodity price shock under perfect and imperfect credibility; Figure 3. Market beliefs to a commodity price shock under perfect and imperfect credibility. The role of monetary policy transparency; Figure 4. Impulse-response to a commodity price shock under perfect and imperfect credibility. The role of monetary policy transparency |
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Figure 5. Market beliefs to a commodity price shock under perfect and imperfect credibility. The role of monetary policy transparency and reputationFigure 6. Impulse-response to a commodity price shock under perfect and imperfect credibility. The role of monetary policy transparency and reputation; Figure 7. Market beliefs to a commodity price shock under perfect and imperfect credibility. The role of monetary and fiscal policy transparency and monetary policy reputation |
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Figure 8. Impulse-response to a commodity price shock under perfect and imperfect credibility. The role of monetary and fiscal policy transparency and monetary policy reputationFigure 9. Volatility, Transparency and Credibility; Table 2. Relationship between GDP growth Volatility and Terms of trade Volatility (I); Table 3. Relationship between GDP growth Volatility and Terms of trade Volatility (II) |
Summary |
"In this paper, we analyze how lack of credibility and transparency of monetary and fiscal policies undermines the effectiveness of macroeconomic policies to isolate the economy from commodity price fluctuations. We develop a general equilibrium model for a commodity-exporting economy where macro policies are conducted through rules. We show that the responses of output, aggregate demand, and inflation to an increase in commodity price are magnified when these rules are imperfectly credible and lack transparency. If policies are imperfectly credible, then transparency helps private agents to learn the systematic behavior of the authorities, reducing the effects of commodity prices shocks. Coherent with the model, we show cross-country evidence that monetary policy transparency and fiscal credibility reduce the incidence of export price volatility on output volatility. Also, our results indicate that having an explicit fiscal rule and an inflation targeting regime contribute to isolate the economy from terms of trade fluctuations"--Abstract |
Notes |
At head of title: IMF Institute for Capacity Development |
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"February 2014." |
Bibliography |
Includes bibliographical references |
Notes |
Online resource; title from pdf title page (IMF.org Web site, viewed Apr 21, 2014) |
Subject |
Prices -- Econometric models
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Monetary policy -- Econometric models
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Fiscal policy -- Econometric models
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Transparency in government.
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Fiscal policy -- Econometric models
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Monetary policy -- Econometric models
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Prices -- Econometric models
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Transparency in government
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Form |
Electronic book
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Author |
Soto, Claudio, author
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International Monetary Fund. Institute for Capacity Development, issuing body.
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ISBN |
1306513499 |
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9781306513494 |
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9781475561944 |
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1475561946 |
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