Description |
1 online resource (62 pages) : color illustrations |
Series |
IMF working paper, 1018-5941 ; WP/16/70 |
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IMF working paper ; WP/16/70.
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Summary |
We introduce subsistence requirements in food consumption into a simple new-Keynesian model with flexible food and sticky non-food prices. We study how the endogenous structural transformation that results from subsistence affects the dynamics of the economy, the design of monetary policy, and the properties of inflation at different levels of development. A calibrated version of the model encompasses both rich and poor countries and broadly replicates the properties of inflation across the development spectrum, including the dominant role played by changes in the relative price of food in poor countries. We derive a welfare-based loss function for the monetary authority and show that optimal policy calls for complete (in some cases nearcomplete) stabilization of sticky-price non-food inflation, despite the presence of a foodsubsistence threshold. Subsistence amplifies the welfare losses of policy mistakes, however, raising the stakes for monetary policy at earlier stages of development.--Abstract |
Notes |
"March 2016." |
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At head of title: "Research Department." |
Bibliography |
Includes bibliographical references (pages 56-61) |
Notes |
Online resource; title from pdf title page (IMF.org Web site, viewed March 21, 2016) |
Subject |
Consumption (Economics) -- Developing countries -- Econometric models
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Food prices -- Developing countries -- Econometric models
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Monetary policy -- Developing countries -- Econometric models
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Inflation (Finance) -- Econometric models
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Well-being -- Developing countries -- Econometric models
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Consumption (Economics) -- Econometric models
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Food prices -- Econometric models
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Inflation (Finance) -- Econometric models
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Monetary policy -- Econometric models
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Developing countries
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Form |
Electronic book
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Author |
Portillo, Rafael (Rafael Antonio), author, (IMFstaff)
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Zanna, Luis-Felipe, author, (IMFstaff)
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O'Connell, Stephen A., author.
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Peck, Richard, author
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International Monetary Fund. Research Department, issuing body.
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ISBN |
1475542631 |
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9781475542639 |
ISSN |
1018-5941 |
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