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This Selected Issues paper analyzes the causes of the high inflation in Belarus. It estimates the contribution of two factors: (1) exchange rate pass-through and (2) administrative price increases. Residual inflation is used as a gauge for inflation caused directly by demand pressures and inflation expectations. It is found that the administrative price increases are a key driver of inflation, even ahead of demand pressures, which also explain a large share of inflation. Although exchange rate pass-through is found to be high and fast, particularly for unregulated prices, its contribution to inflation has been comparatively modest in recent years owing to the stability of the exchange rate.

International Monetary Fund. --- Political Science --- Law, Politics & Government --- Public Finance --- Foreign Exchange --- Inflation --- Macroeconomics --- Price Level --- Deflation --- Currency --- Foreign exchange --- Exchange rate pass-through --- Consumer price indexes --- Exchange rates --- Price controls --- Prices --- Price indexes --- Government policy --- Belarus, Republic of

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The gap between potential and actual output—the output gap—is a key variable for policymaking. This paper adapts the methodology developed in Blagrave and others (2015) to estimate the path of output gap in the U.S. economy. The results show that the output gap has considerably shrunk since the Great Recession, but still remains negative. While the results are more robust than other existing methodologies, there is still significant uncertainty surrounding the estimates.

Global Financial Crisis, 2008-2009. --- Supply and demand. --- United States -- Economic policy -- 2009-. --- Economic History --- Business & Economics --- Inflation --- Labor --- Production and Operations Management --- Price Level --- Deflation --- Monetary Policy --- Macroeconomics: Production --- Labor Standards: Labor Force Composition --- Macroeconomics --- Labour --- income economics --- Potential output --- Output gap --- Capacity utilization --- Labor force participation --- Production --- Prices --- Economic theory --- Industrial capacity --- Labor market --- United States

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Economies in the Western Hemisphere are generally seeing a slowdown in growth. The U.S. economy regained momentum after a slow start at the beginning of the year, while in Latin America and the Caribbean economic activity continues to decelerate. Stronger U.S. growth should benefit countries in the region, especially those with tighter links through trade, remittances, and tourism (Mexico, Central America, and the Caribbean). Weaker commodity prices for the foreseeable future, however, will continue to hurt South America's net commodity exporters, lowering national incomes, reducing investment, and worsening fiscal balances. These developments could, in turn, impede progress made in recent years in poverty reduction. These developments could, in turn, impede progress made in recent years in poverty reduction. Key risks, including an abrupt tightening of U.S. interest rates or a further slowdown in China, may disproportionately affect Latin America. Chapters in this report examine monetary policy in Latin America, including the region’s exposure to global financial shocks; the role of value chains and regional trade agreements in fostering trade integration; and financial market development in the region.

Banks and Banking --- Exports and Imports --- Finance: General --- Foreign Exchange --- Macroeconomics --- Inflation --- Commodity Markets --- Financial Markets and the Macroeconomy --- Interest Rates: Determination, Term Structure, and Effects --- Energy: Demand and Supply --- Prices --- Price Level --- Deflation --- Finance --- International economics --- Currency --- Foreign exchange --- Investment & securities --- Financial sector development --- Commodity prices --- Oil prices --- Exports --- Financial markets --- International trade --- Financial services industry --- Interest rates --- United States

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The paper develops a small New-Keynesian FPAS model for Vietnam. The model closely matches actual data from 2000-2014. We derive an optimal monetary policy rule that minimizes variability of output, inflation, and the exchange rate. Compared to the baseline model, the optimal rule places a larger weight on output stabilization as the intermediate target to achieve inflation stability, while allowing greater exchange rate flexibility. We analyze the dynamics of key macro variables under various shocks including external and domestic demand shocks and a lift-off of U.S. interest rates. We find that the optimal monetary policy rule delivers greater macroeconomic stability for Vietnam under the shock scenarios.

Banks and Banking --- Foreign Exchange --- Inflation --- Money and Monetary Policy --- Production and Operations Management --- Price Level --- Deflation --- Money and Interest Rates: Forecasting and Simulation --- Monetary Policy --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics --- Currency --- Foreign exchange --- Monetary economics --- Finance --- Output gap --- Exchange rates --- Inflation targeting --- Real interest rates --- Prices --- Production --- Monetary policy --- Financial services --- Economic theory --- Interest rates --- Vietnam

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Many low-income countries do not use interest rates as their main monetary policy instrument. In East Africa, for instance, targeting money aggregates has been pretty much the rule rather than the exception. Nevertheless, these targets are seldom met and often readjusted according to the economic environment. This opens up the possibility that central banks are de facto pursuing a strategy more akin to a Taylor Rule. Estimations of small-scale models for Kenya, Uganda and Tanzania suggest that these self-styled "monetary targeters" are respecting the Taylor Principle, that is are on average increasing nominal interest rates more than proportionally to inflation. Nevertheless, steep deviations from the Taylor Rule have taken place in Kenya and Tanzania. In Uganda, these errors are much smaller, in fact similar in size to Taylor Rule deviations found for Brazil. More surprisingly, they are smaller than South Africa’s, the continent’s sole long-term inflation targeter.

Banks and Banking --- Inflation --- Money and Monetary Policy --- Production and Operations Management --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Price Level --- Deflation --- Macroeconomics: Production --- Monetary Policy --- Macroeconomics --- Finance --- Monetary economics --- Output gap --- Interbank rates --- Inflation targeting --- Prices --- Production --- Financial services --- Monetary policy --- Economic theory --- Interest rates --- Tanzania, United Republic of