Toward Inflation Targeting in Sri Lanka:

This paper develops a practical model-based forecasting and policy analysis system (FPAS) to support a transition to an inflation forecast targeting regime in Sri Lanka. The FPAS model provides a relatively good forecast for inflation and a framework to evaluate policy trade-offs. The model simulati...

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Bibliographic Details
Main Author: Ding, Ding (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2011
Series:IMF Working Papers Working Paper No. 11/81
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Summary:This paper develops a practical model-based forecasting and policy analysis system (FPAS) to support a transition to an inflation forecast targeting regime in Sri Lanka. The FPAS model provides a relatively good forecast for inflation and a framework to evaluate policy trade-offs. The model simulations suggest that an open-economy inflation targeting rule can reduce macroeconomic volatility and anchor inflationary expectations given the size and type of shocks faced by the economy. Sri Lanka could aim to target a broad inflation range initially due to its susceptibility supply-side shocks while enhancing exchange rate flexibility and strengthening the effectiveness of monetary policy in the transition to an inflation forecast targeting regime
Physical Description:1 Online-Ressource (28 p)
ISBN:1455226076
9781455226078

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