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We propose a fiscal rule that fulfills a specific debt reduction objective while maintaining significant fiscal flexibility-two overarching concerns in Israel. Not unlike the Swiss "debt brake," the rule incorporates an error-correction mechanism (ECM) through which departure from the debt objective affects binding medium-run expenditure ceilings. Two variants of our ECM rule are shown to be superior to a comparable deficit rule in terms of attaining the debt objective and allowing for fiscal stabilization while supporting medium-term expenditure planning. Given its relative sophistication, a proper implementation of the ECM rule requires supportive fiscal institutions, including independent input and assessment.

Debts, Public --- Fiscal policy --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Econometric models. --- Government policy --- Budgeting --- Macroeconomics --- Public Finance --- National Government Expenditures and Related Policies: General --- Fiscal Policy --- Debt Management --- Sovereign Debt --- National Budget --- Budget Systems --- Public finance & taxation --- Budgeting & financial management --- Expenditure --- Fiscal rules --- Budget planning and preparation --- Expenditures, Public --- Budget --- Israel

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This paper analyzes the monetary policy framework in Kazakhstan. The authorities have been successful in containing inflation in the context of a managed exchange rate regime. Over the past two years, the central bank has taken steps to enhance its ability to regulate liquidity in the financial system. However, the current policy interest rate does not properly signal the stance of policy, reflected in a weak transmission from the policy rate to money market interest rates. With the use of a stylized model, the paper studies the macro determinants of money market interest rates under the current framework, and illustrates both the benefits and challenges of active interest rate policy. The model shows that limited use of instruments to steer short-term interest rates weakens the framework’s ability to counteract shocks. Finally, the paper explores the implications of varying degrees of exchange rate flexibility for interest rate policy and open market operations.

Monetary policy --- Interest rates --- Money market --- Foreign exchange rates --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Money markets --- Finance --- Financial institutions --- Money --- Money market rates --- Rate of interest --- Rates, Interest --- Interest --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Rates --- Banks and Banking --- Foreign Exchange --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Interest Rates: Determination, Term Structure, and Effects --- Money and Interest Rates: Forecasting and Simulation --- Monetary Policy --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Banking --- Currency --- Short term interest rates --- Open market operations --- Exchange rate adjustments --- Financial services --- Central banks --- Exchange rate flexibility --- Banks and banking --- Kazakhstan, Republic of

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The paper extends a standard semi-structural model to account for nonlinear and asymmetric effects of monetary policy credibility. In our setting, central bank credibility is proportional to the deviation of inflation expectations from the announced inflation target, with positive deviations being more costly compared to negative ones. A loss in policy credibility as a result of shocks leads to a more persistent, backward-looking inflation process, and is associated with lower output. We find that the extended model with credibility effects matches well the key macroeconomic data over specific past episodes for Indonesia and Philippines and consider its adaptation to integrated policy frameworks as an area for further exploration.

Indonesia --- Banks and Banking --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Production and Operations Management --- Forecasting and Other Model Applications --- Money and Interest Rates: Forecasting and Simulation --- Monetary Policy --- Central Banks and Their Policies --- Price Level --- Deflation --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Banking --- Monetary economics --- Output gap --- Central bank policy rate --- Inflation targeting --- Price stabilization --- Prices --- Production --- Financial services --- Monetary policy --- Economic theory --- Interest rates --- Government policy

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We present a newly developed Quarterly Projection Model (QPM) for Vietnam. This QPM represents an extended version of the canonical New Keynesian semi-structural model, accounting for Vietnam-specific factors, including a hybrid monetary policy framework. The model incorporates the array of policy instruments, specifically interest rates, indicative nominal credit growth guidance, and exchange rate interventions, that the authorities employ to meet the primary objective of price stability. The calibrated model embeds a theoretically consistent monetary transmission mechanism and demonstrates robust in-sample forecasting accuracy, both of which are important prerequisites for the richer analysis and forecast-based narratives that support a forward-looking monetary policy regime.

Macroeconomics --- Economics: General --- Foreign Exchange --- Inflation --- Money and Monetary Policy --- Business Fluctuations --- Cycles --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary Policy --- Price Level --- Deflation --- Economic & financial crises & disasters --- Economics of specific sectors --- Currency --- Foreign exchange --- Monetary economics --- Prices --- Nominal effective exchange rate --- Exchange rates --- Exchange rate adjustments --- Real exchange rates --- Currency crises --- Informal sector --- Economics --- Monetary policy --- Vietnam

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In the face of sharply lower oil prices and geopolitical tensions and sanctions, economic activity in Russia decelerated in late 2014, resulting in negative spillovers on Commonwealth of Independent States (CIS) and, to a lesser extent, on Baltic countries. The spillovers to eastern Europe have been limited. The degree of impact is commensurate with the level of these countries’ trade, remittances, and foreign direct investment (FDI) links with Russia. So far, policy action by the affected countries has focused on mitigating the immediate consequences of spillovers.

Commonwealth Of Independent States --- Business Cycles --- Russia (Federation) --- Former Soviet Republics --- History --- Business & Economics --- Foreign Exchange --- Investments: General --- Macroeconomics --- Money and Monetary Policy --- Externalities --- Energy: Demand and Supply --- Prices --- Investment --- Capital --- Intangible Capital --- Capacity --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Spillovers --- Oil prices --- Exchange rates --- Depreciation --- Currencies --- Financial sector policy and analysis --- Money --- National accounts --- International finance --- Saving and investment --- Russian Federation