Morocco: A Practical Approach to Monetary Policy Analysis in a Country with Capital Controls

Abstract

The Central Bank of Morocco has been working on developing a Forecasting and Policy Analysis System (FPAS) to support a gradual move toward a more flexible exchange rate regime and the eventual adoption of a full-fledged inflation-targeting (IT) regime. At the center of the FPAS is a quarterly projection model that was tailored for two different types of exchange rate regimes. Presently, the fixed exchange rate model version is to be used during the pre-IT period, while the flexible exchange rate model version is to be used to prepare alternative scenarios for monetary policy decision makers to discuss the potential policy implications of shocks under an IT regime.

Moroccan Dirham Flexibilization and Equilibrium Exchange Rate: A Quest for Grail?

“…Also, in the historical regime of hard anchoring, the control of the capital account had an essential function of "safety valve." (Benlamine, 2018) But if floating capital flows had to increase massively in the Dirham's flexibility regime, this would limit the effectiveness of monetary policy (Mundell, 1963) and (Krugman 1998).…”

4GM: A New Model for the Monetary Policy Analysis in Colombia

“…4GM is a semi-structural New-Keynesian rational expectation model for an oil-exporting small open economy. The 4GM is similar to the IMF's Global Projection Model (Carabenciov et al (2008a,b); Carabenciov et al (2013)), and other models used at several policy institutions (Coats et al (2003); Andrle et al (2013); Andrle et al (2014); Charry et al (2014); Obstfeld et al (2016); Benes et al (2017); Musil et al (2018); Benlamine et al (2018)). This similarity facilitates improvements through international cooperation and peer-to-peer information sharing.…”

Monetary Policy, Growth and Employment in Developing Areas: A Review of the Literature

“…In the context of Morocco, Benlamine et al (2018) test impulse responses to three positive monetary policy relevant shocks: to aggregate demand, prices, and exchange rate (devaluation).…”