01744cas a2200241 a 4500 AALejournalIMF017597 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475595772 1018-5941 BD-DhAAL BD-DhAAL Walker, Sebastien. Farms, Fertiliser, and Financial Frictions : Yields from a DSGE Model / Sebastien Walker. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (52 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 This paper develops a Dynamic Stochastic General Equilibrium (DSGE) model with a financial accelerator which captures key features of low-income countries (LICs). The predominance of supply shocks in LICs poses distinct challenges for policymakers, given the negative correlation between inflation and the output gap in the case of supply shocks. Our results suggest that: (1) in the face of a supply-side shock, the most desirable interest rate rule involves simply targeting current inflation and smoothing the policy interest rate; and (2) ignoring financial frictions when evaluating policy rules can be particularly problematic in LICs, where financial frictions loom especially large. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2017/112 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/112/001.2017.issue-112-en.xml IMF e-Library