01756cas a2200241 a 4500 AALejournalIMF011440 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463927219 1018-5941 BD-DhAAL BD-DhAAL Shamloo, Maral. Inflation Dynamics in FYR Macedonia / Maral Shamloo. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (23 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper we study the dynamics of inflation in Macedonia, provide three forecasting tools and draw some policy conclusions from the quantitative results. We explore three forecasting methods for inflation. We use a Dynamic Factor Model (DFM) for short-term, monthly forecasting. We also develop two quarterly models: A Vector Error Correction Model (VECM), and a New Keynesian Phillips Curve (NKPC) for a more structural model of inflation. The NKPC shows a significant effect of output gap and inflation expectations on current inflation, confirming that the expectations channel of monetary transmission mechanism is strong. In terms of forecast-error variance, we show that all three models do very well in one-period ahead forecasting. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2011/287 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/287/001.2011.issue-287-en.xml IMF e-Library