Cover IMF Staff Country Reports
Iceland: Selected Issues
Author: International Monetary Fund
Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2006: Issue 297
Language:
English
Publication Date:
08 Aug 2006
DOI:
https://doi.org/10.5089/9781451819335.002
ISBN:
9781451819335
ISSN:
1934-7685
Pages:
46
Keywords:
ISCR; CR; reaction function; inflation-output variability trade-off; countercyclical fiscal policy; output-inflation variability tradeoff; Icelandic bank; Credit risk; Stocks; Loans; Inflation; Global
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Given its small size and openness, the Icelandic economy has been subject to large shocks. Systematic coordination of monetary and fiscal policy, however, could help improve the inflation-output variability trade-off. The fiscal rule is designed to simultaneously ensure a consistently countercyclical fiscal stance and achieve a stable public debt target. The parameter values of the model are estimated from the quarterly data using a Bayesian technique. To assess how the introduction of the fiscal policy changes the inflation-output variability trade-off in Iceland, the paper compares the efficiency policy frontiers.
Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund