Decomposing the Inflation Dynamics in the Philippines

Decomposing the Inflation Dynamics in the Philippines
Title Decomposing the Inflation Dynamics in the Philippines PDF eBook
Author Mr.Si Guo
Publisher International Monetary Fund
Total Pages 20
Release 2019-07-12
Genre Business & Economics
ISBN 1498319327

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Inflation rates rose sharply in the Philippines during 2018. Understanding the demand and supply sources of inflation pressures is key to monetary policy response. Qualitatively, indicators have pointed to evidence of inflation pressures from both sides in 2018, with the supply factors, by and large, associated with commodity-price shocks and demand factors deduced from gleaning at the wider non-oil trade deficits seen in the Philippines. Quantitatively, we deploy a semi-structural model to decompose the contributions of various shocks to inflation. Our main findings are (1) supply factors (mainly global commodity prices) played a prominent role in explaining the rise in inflation in 2018; (2) demand factors also contributed to inflation in a non-negligible way, justifying the need for tighter monetary policy in 2018; (3) the size of the estimated output gap (an important indicator of demand pressures) could be larger, when considering the widening trade deficits in 2018; and (4) a delayed monetary policy tightening can be costly in terms of higher inflation rates, requiring larger and more aggressive interest rate hikes to bring inflation under control, based on a counterfactual exercise.

Decomposing the Inflation Dynamics in the Philippines

Decomposing the Inflation Dynamics in the Philippines
Title Decomposing the Inflation Dynamics in the Philippines PDF eBook
Author Mr.Si Guo
Publisher International Monetary Fund
Total Pages 20
Release 2019-07-12
Genre Business & Economics
ISBN 1513508016

Download Decomposing the Inflation Dynamics in the Philippines Book in PDF, Epub and Kindle

Inflation rates rose sharply in the Philippines during 2018. Understanding the demand and supply sources of inflation pressures is key to monetary policy response. Qualitatively, indicators have pointed to evidence of inflation pressures from both sides in 2018, with the supply factors, by and large, associated with commodity-price shocks and demand factors deduced from gleaning at the wider non-oil trade deficits seen in the Philippines. Quantitatively, we deploy a semi-structural model to decompose the contributions of various shocks to inflation. Our main findings are (1) supply factors (mainly global commodity prices) played a prominent role in explaining the rise in inflation in 2018; (2) demand factors also contributed to inflation in a non-negligible way, justifying the need for tighter monetary policy in 2018; (3) the size of the estimated output gap (an important indicator of demand pressures) could be larger, when considering the widening trade deficits in 2018; and (4) a delayed monetary policy tightening can be costly in terms of higher inflation rates, requiring larger and more aggressive interest rate hikes to bring inflation under control, based on a counterfactual exercise.

A Monetary and Financial Policy Analysis and Forecasting Model for the Philippines (PAMPh2.0)

A Monetary and Financial Policy Analysis and Forecasting Model for the Philippines (PAMPh2.0)
Title A Monetary and Financial Policy Analysis and Forecasting Model for the Philippines (PAMPh2.0) PDF eBook
Author Francisco G. Dakila Jr.
Publisher International Monetary Fund
Total Pages 116
Release 2024-07-12
Genre
ISBN

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The Bangko Sentral ng Pilipinas (BSP) has enhanced its macroeconomic modeling through the Forecasting and Policy Analysis System (FPAS), transitioning from a multi-equation econometric model to a modernized system centered on the Quarterly Projection Model (QPM). In its new version, the Policy Analysis Model for the Philippines (PAMPh2.0) integrates forward-looking projections, endogenous monetary policy, fiscal and macroprudential considerations, labor dynamics, and addresses complex shocks and policy trade-offs, facilitating effective policy mix determination and supporting real-time policy evaluation. The BSP’s modernization efforts also include refining forecast calendars and strengthening communication channels to accommodate the operationalization of PAMPh2.0. Detailed validation methods ensure empirical consistency. Finally, future refinements will align the model with evolving empirical findings and theoretical insights, ensuring its continued relevance.

An Extended Quarterly Projection Model: Credit Cycle, Macrofinancial Linkages and Macroprudential Measures: The Case of the Philippines

An Extended Quarterly Projection Model: Credit Cycle, Macrofinancial Linkages and Macroprudential Measures: The Case of the Philippines
Title An Extended Quarterly Projection Model: Credit Cycle, Macrofinancial Linkages and Macroprudential Measures: The Case of the Philippines PDF eBook
Author Mr. Philippe D Karam
Publisher International Monetary Fund
Total Pages 45
Release 2021-10-22
Genre Business & Economics
ISBN 1589068718

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We extend a modern practical Quarterly Projection Model to study credit cycle dynamics and risks, focusing on macrofinancial linkages and the role of macroprudential policy in achieving economic and financial stability. We tailor the model to the Philippines and evaluate the model’s properties along several dimensions. The model produces plausible dynamics and sensible forecasts. This along with its simplicity makes it useful for policy analysis. In particular, it should help policymakers understand the quantitative implications of responding to changes in domestic financial conditions, along with other shocks, through the joint use of macroprudential and monetary policies.

International Macroeconomics in the Wake of the Global Financial Crisis

International Macroeconomics in the Wake of the Global Financial Crisis
Title International Macroeconomics in the Wake of the Global Financial Crisis PDF eBook
Author Laurent Ferrara
Publisher Springer
Total Pages 298
Release 2018-06-13
Genre Business & Economics
ISBN 3319790757

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This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.

Monetary Policy and Inflation Dynamics in ASEAN Economies

Monetary Policy and Inflation Dynamics in ASEAN Economies
Title Monetary Policy and Inflation Dynamics in ASEAN Economies PDF eBook
Author Geraldine Dany-Knedlik
Publisher International Monetary Fund
Total Pages 37
Release 2018-06-21
Genre Business & Economics
ISBN 1484363043

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This paper investigates the evolution of inflation dynamics in the five largest ASEAN countries between 1997 and 2017. To account for changes in the monetary policy frameworks since the Asian Financial Crisis (AFC), the analysis is based on country-specific Phillips curves allowing for time-varying parameters. The paper finds evidence of a higher degree of forward-looking dynamics and a better anchoring of inflation expectations, consistent with the improvements in monetary policy frameworks in the region. In contrast, the quantitative impact of cyclical fluctuations and import prices has gradually diminished over time.

Structural change, fundamentals, and growth: a framework and case studies

Structural change, fundamentals, and growth: a framework and case studies
Title Structural change, fundamentals, and growth: a framework and case studies PDF eBook
Author McMillan, Margaret
Publisher Intl Food Policy Res Inst
Total Pages 323
Release 2017-05-11
Genre Political Science
ISBN 0896292142

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