Finished researches

Policy Room Index

Authors: Tuvshintugs B, Manlaibaatar Z, Munkh-Ireedui B

Source: ERI

Keywords: economic growth, overheating, monetary policy, fiscal policy, procyclicality

Date: 2015-12-01

The aim of this project is to determine the extent of overheating of the economy as well as the extent to which policy makers will be able respond to various negative shocks in the economy. Overheating occurs when production capacity falls short of increasing demand. A fluctuation created by any shock is magnified as households decrease their consumption and entrepreneurs scale down their investment. The policy room on the other hand, shows the capacity of the Government to stabilize the cyclical movement in the economy.

Compared to 22 countries whose growth is strongly correlated with exports of mining commodities, the Mongolian economy rapidly overheated between 2010 and 2012, and started to cool down since 2013. The policy room for the Mongolian economy shrank significantly since 2008 and it remained limited during 2009 when the economy was cooling down. Since then, the policy room was further squeezed. Although, the policy room has slightly been expanding for the last few years, it is not satisfactory.

Report is available only in Mongolian 

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