(UTV|COLOMBO) – The International Monetary Fund (IMF) has published a working paper on an open economy quarterly projection model for Sri Lanka which documents a semi-structural model developed for Sri Lanka.
According to the authors, this model, extended with a fiscal sector block, is expected to serve as a core forecasting model in the process of the Central Bank of Sri Lanka’s move towards flexible inflation targeting.
The model includes a forward-looking endogenous interest rate and foreign exchange rate policy rules allowing for flexible change in policy behaviour. It is a gap model that allows for simultaneous identification of business cycle position and long-term equilibrium.
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