Iceland: Selected Issues
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 countercyclica...
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| Format: | Report |
| Language: | unknown |
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| Online Access: | http://www.imf.org/external/pubs/cat/longres.aspx?sk=19528 |
| Summary: | 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. 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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