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Using a variant of the IMF's Global Economy Model (GEM), featuring energy as both an intermediate input into production and a final consumption good, this paper examines the macroeconomic implications of large increases in the price of energy. Within a fully optimizing framework with nominal and real rigidities arising from costly adjustment, large increases in energy prices can generate an inflation response similar to that seen in the 1970s if the monetary authority misperceives the economy's supply capacity and workers resist the erosion in their real consumption wages resulting from the price increase. In the absence of either of these two responses, the model suggests that energy price shocks cannot generate the type of stagflation witnessed in the 1970s. Further, even allowing for these two effects, the results do not suggest that the increase in the price of oil in late 1973 and early 1974 can fully explain the extent of the slowing in real activity or the magnitude of the acceleration in inflation experienced in the United States in 1974 and 1975.

Electronic books. -- local. --- Monetary policy -- Econometric models. --- Petroleum products -- Prices -- Econometric models. --- Inflation --- Macroeconomics --- Production and Operations Management --- Monetary Policy --- Energy: Demand and Supply --- Prices --- Macroeconomics: Production --- Price Level --- Deflation --- Energy prices --- Oil prices --- Potential output --- Output gap --- Production --- Economic theory --- United States

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Over the last decade, GDP growth in emerging Asia was roughly twice as fast as average world growth. The IMF’s Global Economy Model (GEM) is used to estimate the impact that emerging Asia’s growth differential has had on Australia. The simulation analysis, which replicates some key features from the last decade, suggests that roughly 25 percent of Australia's growth over the last decade has been from emerging Asia’s growth differential over that period. Looking ahead, the analysis suggests that should emerging Asia continue to grow in a similar fashion, Australia’s growth dividend could almost double. On the other hand, if growth in emerging Asia remained strong, but became more balanced across the tradable and nontradable goods sectors then Australia’s growth dividend would be slightly lower than the estimate for the last decade.

Economic development --- Asia --- Foreign economic relations --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Asian and Pacific Council countries --- Eastern Hemisphere --- Eurasia --- Investments: Commodities --- Foreign Exchange --- Production and Operations Management --- Commodity Markets --- Macroeconomics: Production --- Currency --- Foreign exchange --- Investment & securities --- Macroeconomics --- Commodities --- Productivity --- Real exchange rates --- Real effective exchange rates --- Exchange rates --- Commercial products --- Industrial productivity --- Australia

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This paper provides some empirical estimates on how tightly is it feasible to control inflation in a very small open economy such as Iceland. Estimated macroeconomic models of Canada, Iceland, New Zealand, the United Kingdom, and the United States are used to derive efficient monetary policy frontiers that trace out the locus of the lowest combinations of inflation and output variability that are achievable under a range of alternative monetary policy rules. These frontiers illustrate that inflation stabilization is more challenging in Iceland than in other industrial countries primarily because of the relative magnitudes of the economic shocks.

Electronic books. -- local. --- Finance -- Iceland. --- Inflation (Finance) -- Iceland. --- Finance --- Business & Economics --- Financial Management & Planning --- Inflation (Finance) --- Funding --- Funds --- Economics --- Currency question --- Natural rate of unemployment --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Production and Operations Management --- Price Level --- Deflation --- Fiscal Policy --- Monetary Policy --- Macroeconomics: Production --- Monetary economics --- Fiscal policy --- Inflation targeting --- Fiscal stance --- Output gap --- Prices --- Monetary policy --- Production --- Economic theory --- Iceland

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This paper uses the IMF's macroeconomic model MULTIMOD to examine the implications of the zero-interest-rate floor (ZIF) for the design of monetary policy in Japan. Similar to findings in other studies, targeting rates of inflation lower than 2.0 percent significantly increases the likelihood of the ZIF becoming binding. Systematic monetary policy strategies that respond strongly to stabilize output and inflation, or that incorporate some explicit price-level component, can help to mitigate the implications of the ZIF.

Banks and Banking --- Inflation --- Money and Monetary Policy --- Production and Operations Management --- Monetary Policy --- Price Level --- Deflation --- Central Banks and Their Policies --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Monetary economics --- Macroeconomics --- Finance --- Inflation targeting --- Real interest rates --- Output gap --- Potential output --- Monetary policy --- Prices --- Financial services --- Production --- Economic theory --- Interest rates --- Japan

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This paper was prepared as part of a euro area macroeconomic model comparisons project. Four standard macroeconomic experiments are considered to illustrate the differences in dynamic adjustment properties of two versions of MULTIMOD, the IMF's multicountry macroeconomic model. One version of MULTIMOD that is examined contains separate country blocks for the three major economies in the euro area, Germany, France, and Italy. The second, more recent version, contains a single block describing the behavior of the whole euro area.

Banks and Banking --- Exports and Imports --- Inflation --- Macroeconomics --- Model Evaluation and Selection --- General Aggregative Models: Forecasting and Simulation --- Money Supply --- Credit --- Money Multipliers --- Interest Rates: Determination, Term Structure, and Effects --- Price Level --- Deflation --- Macroeconomics: Consumption --- Saving --- Wealth --- Trade: General --- Finance --- International economics --- Short term interest rates --- Consumption --- Real interest rates --- Exports --- Financial services --- Prices --- National accounts --- International trade --- Interest rates --- Economics --- Italy