This study adopts fundamentally the same framework as the other econometric models built by the Department of Economic Research, Central Bank of the Philippines (CBP),1) and presents a small scale model which attempts to reflect the main characteristics of the Philippine economy and permits also its policy analysis. A number of modifications have been made to improve the previously obtained results and to come up with more extensive analyses of the model and its implications.2)The model focuses its attention on: 1) the channels of transmission of the effects of monetary policies to target variables like prices, real income and the balance of payments; and 2) the feedback process from non-monetary to domestic monetary variables.
KeywordsMonetary Policy Real Income Import Price Monetary Authority Total Liquidity
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