Author: Rafael Portillo Publisher: International Monetary Fund ISBN: 1475542631 Category : Business & Economics Languages : en Pages : 62
Book Description
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.
Author: Rafael Portillo Publisher: International Monetary Fund ISBN: 1475515162 Category : Business & Economics Languages : en Pages : 62
Book Description
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.
Author: Andrew Berg Publisher: Oxford University Press ISBN: 019878581X Category : Business & Economics Languages : en Pages : 474
Book Description
Low-income countries in sub-Saharan Africa present unique monetary policy challenges, from the high share of volatile food in consumption to underdeveloped financial markets. This book draws on the International Monetary Fund's research and practice to uncover how monetary policy in this region currently operates, and what changes should be made.
Author: Abdul-Aziz Iddrisu Publisher: Routledge ISBN: 1000528510 Category : Business & Economics Languages : en Pages : 88
Book Description
This book focuses on the impact of monetary policy and food price volatility and inflation in emerging and developing economies. The tendency for food price volatility to blot inflation forecasting accuracy, engender tail dynamics in the overall inflation trajectory and derail economic welfare is well known in the literature. The ability of monetary policy to exact stability in food prices, theoretically, has also been well espoused. The empirical evidence, however, is not only in short supply, but also the studies available have dwelt on approaches that underplay the volatile behaviour of food prices. This book focuses on inflation targeting in emerging economies such as Chile, Mexico, Turkey, Brazil, Hungary, Russia, Colombia, South Africa, Indonesia and Ghana, as these are economies with considerable proportion of the consumption basket occupied by food. The book provides the means to understand at first hand the correct way to model food inflation, account for the related policy responses to deviations either in the short or medium to long term, and in market conditions that are subject to excessive variability. Strong evidence is presented that captures deviations of food prices from their trend and the accompanying monetary policy effect in stabilizing such variabilities across distinct frequencies. The novel approach in this book addresses the burgeoning puzzles of asymmetry in monetary policy effect on food prices at high, medium and low episodes of food inflation. In doing so, this book presents a powerful tool for researchers interested in understanding not just the transmission mechanism, but also the magnitudes involved, and to policymakers whose existing tools have failed them. Future studies will do well to deepen the evidence and seek new grounds to which the phenomenon manifests beyond and below emerging markets. This book will be of great interest to students, scholars and policymakers involved in agricultural economics, financial economics, food security and sustainable development.
Author: Hites Ahir Publisher: International Monetary Fund ISBN: 1513566601 Category : Business & Economics Languages : en Pages : 76
Book Description
Despite strong economic growth since 2000, many low-income countries (LICs) still face numerous macroeconomic challenges, even prior to the COVID-19 pandemic. Despite the deceleration in real GDP growth during the 2008 global financial crisis, LICs on average saw 4.5 percent of real GDP growth during 2000 to 2014, making progress in economic convergence toward higher-income countries. However, the commodity price collapse in 2014–15 hit many commodity-exporting LICs and highlighted their vulnerabilities due to the limited extent of economic diversification. Furthermore, LICs are currently facing a crisis like no other—COVID-19, which requires careful policymaking to save lives and livelihoods in LICs, informed by policy debate and thoughtful research tailored to the COVID-19 situation. There are also other challenges beyond COVID-19, such as climate change, high levels of public debt burdens, and persistent structural issues.
Author: International Monetary Fund. Research Dept. Publisher: International Monetary Fund ISBN: 1475532822 Category : Business & Economics Languages : en Pages : 9
Book Description
In the June 2016 issue of IMF Research Bulletin, Eugenio Cerutti interviews Lars E.O. Svensson. Lars, a professor at the Stockholm School of Economics, was a Visiting Scholar at the IMF. In the interview, he discusses monetary policy, financial stability, and life at the IMF. The Bulletin also features a listing of recent Working Papers, Staff Discussion Notes, and key IMF publications. The table of contents from the latest issue of IMF Economic Review is also included.
Author: Christopher Adam Publisher: Oxford University Press ISBN: 019870481X Category : Business & Economics Languages : en Pages : 330
Book Description
This volume examines key policy challenges facing Tanzania over the coming decades in the areas of agriculture, trade, urbanization, employment, finance, and natural investment.
Author: Cedric Okou Publisher: International Monetary Fund ISBN: Category : Business & Economics Languages : en Pages : 44
Book Description
This paper analyzes the domestic and external drivers of local staple food prices in Sub-Saharan Africa. Using data on domestic market prices of the five most consumed staple foods from 15 countries, this paper finds that external factors drive food price inflation, but domestic factors can mitigate these vulnerabilities. On the external side, our estimations show that Sub-Saharan African countries are highly vulnerable to global food prices, with the pass-through from global to local food prices estimated close to unity for highly imported staples. On the domestic side, staple food price inflation is lower in countries with greater local production and among products with lower consumption shares. Additionally, adverse shocks such as natural disasters and wars bring 1.8 and 4 percent staple food price surges respectively beyond generalized price increases. Economic policy can lower food price inflation, as the strength of monetary policy and fiscal frameworks, the overall economic environment, and transport constraints in geographically challenged areas account for substantial cross-country differences in staple food prices.
Author: Mr.Sébastien Walker Publisher: International Monetary Fund ISBN: 1475595778 Category : Business & Economics Languages : en Pages : 52
Book Description
This paper develops a Dynamic Stochastic General Equilibrium (DSGE) model with a financial accelerator which captures key features of low-income countries (LICs). The predominance of supply shocks in LICs poses distinct challenges for policymakers, given the negative correlation between inflation and the output gap in the case of supply shocks. Our results suggest that: (1) in the face of a supply-side shock, the most desirable interest rate rule involves simply targeting current inflation and smoothing the policy interest rate; and (2) ignoring financial frictions when evaluating policy rules can be particularly problematic in LICs, where financial frictions loom especially large.
Author: Rahul Anand Publisher: International Monetary Fund ISBN: 1513597469 Category : Business & Economics Languages : en Pages : 37
Book Description
In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained and the share of food expenditures in total consumption expenditures is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting improves welfare outcomes. We also compute the optimal price index, which includes a positive weight on food prices but, unlike headline inflation, assigns zero weight to import prices.
Author: Rafael Portillo
Author: Rafael Portillo
Author: Andrew Berg
Author: Abdul-Aziz Iddrisu
Author: Hites Ahir
Author: International Monetary Fund. Research Dept.
Author: Christopher Adam
Author: Cedric Okou
Author: Mr.Sébastien Walker
Author: Rahul Anand