Introducing a Semi-Structural Macroeconomic Model for Rwanda

Develops a simple semi structural model for the Rwandan economy to better understand the monetary policy transmission mechanism

From:
Foreign, Commonwealth & Development Office
Published
1 January 2014
Country:
Rwanda
Document Type:
Working Paper
Theme:
Economic Growth
Authors:
Charry, L., Gupta, P. and Thakoor, V.

Abstract

We develop a simple semi structural model for the Rwandan economy to better understand the monetary policy transmission mechanism. A key feature of the model is the introduction of a modified uncovered interest parity condition to capture key structural features of Rwanda’s economy and policy framework, such as the limited degree of capital mobility. A filtration of the observed data through the model allows us to illustrate the contribution of various factors to inflation dynamics and its deviations from the inflation target. Our results, consistent with evidence for other countries in the region, suggest that food and oil prices as well as the exchange rate have accounted for the bulk of inflation dynamics in Rwanda.

Citation

Charry, L.; Gupta, P.; Thakoor, V. Introducing a Semi-Structural Macroeconomic Model for Rwanda. International Monetary Fund, Washington DC, USA (2014) 37 pp.

Introducing a Semi-Structural Macroeconomic Model for Rwanda (PDF, 989KB)

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Published 1 January 2014
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