Supplementary materials for online course: IMFx-FPP.2x
Financial Programming and Policies, Part 2: Program Design
A macroeconomic model for financial programming?
The financial programming and policies (FPP) framework, pioneered by the International Monetary Fund, has long been a key tool that illustrates interrelationships between a country’s expenditures and its financing flows, both internally and from abroad. We have extended that traditional FPP framework by joining together rudimentary behavioral equations from different sectors that in a way that allows us to obtain equilbrium values of key macroeconomic variables – a small macroeconomic model. In so doing, we may easily generate alternative “what if” scenarios in a structured and consistent way to further illustrate a country's vulnerabilities. The paper, spreadsheets, and other materials on this website will help you understand how the algebra behind the model. It is hoped that the algebraic conventions used to integrate different parts of the model – the ‘babbelfish’ – will also aid your intuition.This is an ongoing project. Your comments are welcome.
DISCLAIMER: The online course “IMFx-FPP.2x” is a product of the International Monetary Fund’s Institute for Capacity Development. That course is based on the website "edx.edu" (see link above). The materials on this website were developed as a standalone product whose purpose is to help participants in that course understand its macroeconomic model in a more comprehensive way.
Standalone versions of the model in small spreadsheets -
download to simulate shocks and policies.
THE MODEL -- A DETAILED EXPLANATION:
“The Algebraic Galaxy of Simple Macroeconomic Models: A Hitchhiker’s Guide,”
Understand the model more deeply.
The paper introduces a notation for the expenditure equations which is linked to potetntial output. A spreadsheet shows how the this notations correspond the traditional notation shown in most textbooks.
Calculate the IS Curve -- traditional notation
The module presents equations for consumption, investment, government spending, exports and imports in a traditional linear format -- similar to many textbooks. From these equations, you can calcuate the IS curve on the spreadsheet provided.