
Contents
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1 Introduction 1 Introduction
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2 An Overview of Rwanda’s Economy and Monetary Policy Regime 2 An Overview of Rwanda’s Economy and Monetary Policy Regime
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3 The Model: Outline, Calibration, Filtering, and Forecast Exercise 3 The Model: Outline, Calibration, Filtering, and Forecast Exercise
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3.1 The Model 3.1 The Model
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3.1.1 Aggregate Demand 3.1.1 Aggregate Demand
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3.1.2 Aggregate Supply 3.1.2 Aggregate Supply
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3.1.3 Exchange Rate Determination 3.1.3 Exchange Rate Determination
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3.1.4 Interest Rate Policy Rule 3.1.4 Interest Rate Policy Rule
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3.1.5 Long-Run Trends 3.1.5 Long-Run Trends
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3.1.6 Foreign Block 3.1.6 Foreign Block
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3.2 Data and Calibration 3.2 Data and Calibration
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4 Filtering Rwandan Data through the Model 4 Filtering Rwandan Data through the Model
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4.1 Forecast 4.1 Forecast
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4.1.1 In-Sample Forecast 4.1.1 In-Sample Forecast
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4.1.2 Out-of-Sample Forecast 4.1.2 Out-of-Sample Forecast
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5 Conclusions 5 Conclusions
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References References
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18 Introducing a Semi-Structural Macroeconomic Model for Rwanda
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Published:March 2018
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Abstract
We develop a simple semi-structural model for the Rwandan economy to better understand the monetary policy transmission mechanism. A key feature of the model is the introduction of a modified uncovered interest parity condition to capture key structural features of Rwanda’s economy and policy framework, such as the limited degree of capital mobility and managed floating regime. A filtration of the observed data through the model allows us to illustrate the contribution of various factors to inflation dynamics and its deviations from the inflation target. Our results, consistent with evidence for other countries in the region, suggest that food and oil prices as well as the exchange rate have accounted for the bulk of inflation dynamics in Rwanda.
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