A Small Scale Macroeconomic Model for Morocco

Abstract. In this research paper, we build a New Keynesian reduced-form macroeconomic model for Morocco. The model encompasses three main blocks: an aggregate demand equation (IS curve), a price-setting equation (Phillips curve) and a Taylor-type monetary policy rule. In our model, we consider a significant forward-looking component when explaining inflation dynamics, which enables us to include agent’s expectations. The downstream aim of this work is to provide the research community with new possibilities in terms of economic workhorse modelling, particularly for monetary policy analysis purposes. Keywords. Small scale model, Forward-looking expectations, Monetary policy, Fixed exchange regime. JEL. C32, E12, E17, E43, E47.