Berg, A., P. Karam, and D. Laxton, 2006, “A Practical Model-Based Approach to Monetary Policy Analysis—Overview,” Working Paper 06/80 (Washington: International Monetary Fund).
Blanchard, O. J., and C. M. Kahn, 1980, “The Solution of Linear Difference Models under Rational Expectations,” Econometrica, 48, pp. 1305–1311.
Clarida, R., J. Galí and M. Gertler, 1998, “Monetary Policy Rules in Practice Some International Evidence,” European Economic Review, 42, pp. 1033–1067.
Galí, J and T. Monacelli, 2005, “Monetary Policy and Exchange Rate Volatility in a Small Open Economy,” Review of Economic Studies, 72, pp. 707–734.
Magud, N., and E. Tsounta, 2012, “To Cut or Not to Cut? That is the (Central Bank’s) Question: In Search of the Neutral Interest Rate in Latin America,” Working Paper 12/243 (Washington: International Monetary Fund).
Prepared by Valentina Flamini and Rodrigo Mariscal Paredes
The estimated timeframe for the transmission from monetary policy rates to inflation is 5 to 6 months in Costa Rica.
This condition guarantees that the system will converge to the steady state for any given initial value in the state variables and any given change in the value of the control variables that satisfy the feasibility constrains.