A Simple Macrofiscal Model for Policy Analysis: An Application to Morocco

Author: Daniel Baksa, Mr. Ales Bulir, and Mr. Roberto Cardarelli

Volume/Issue: Volume 2021 Issue 190

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , Economics / General , Fiscal Policy , Morocco , Fiscal Multiplier , fiscal policy transmission channels , Policy reaction function , B , aggregate supply , peg regime , fiscal policy transmission mechanisms , Exchange rate arrangements , Real exchange rates , Output gap , Inflation targeting , Maghreb , Global

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Summary

The paper describes a semistructural macrofiscal approach to simulating and forecasting macroeconomic policies. The model focuses on only a few variables that are consistent with the New Keynesian framework. Thanks to its simplicity, it facilitates an initial and intuitive understanding of monetary and fiscal policy transmission channels, and their main impact on economic activity. The model is adapted to Morocco and we demonstrate its application with an illustrative scenario of policy responses to a slower-than-expected recovery from the Covid-19 pandemic, under different monetary policy and exchange rate regimes.