Consultancy on Exchange Rate Pass-Through & Monetary Policy Reforms: A DSGE Analysis of Two Arab Countries (Technical Paper)

The consultant will deliver the following in a timely manner: • Detailed Outline of the technical paper on Exchange Rate Pass-Through, Monetary Policy reforms in two selected Arab countries: A DSGE Framework. • First Draft of the technical paper, using a multi-layered empirical and structural approach to capture both short-run dynamics and medium-term policy mechanisms. Structural analysis will be conducted using DSGE models adapted to two selected dollarized economies, serving as analytical benchmarks: - one oil-exporting economy with a rigid exchange rate regime (such as GCC countries), - one non-oil, net-importing economy with a more flexible exchange rate regime (such as Egypt, Jordan or Tunisia); The DSGE framework will explicitly incorporate imperfect credibility, fiscal dominance, and exchange rate pass-through. It allows for a coherent and structural modeling of exchange rate pass-through mechanisms to inflation and economic activity, as well as an assessment of the impact of alternative monetary policy arrangements and macroeconomic shocks across differentiated institutional contexts. • Final draft of the technical paper (8,000 words) following one round of integrated comments. • The codes of the DSGE model together with the complete database and results in Excel format.

Remote

4 months

Arab countries face persistent challenges in managing inflation and macroeconomic stability amid exchange rate volatility, high import dependence, and evolving monetary policy frameworks. Many economies in the region rely heavily on imported food, energy, and intermediate goods, making domestic prices particularly sensitive to exchange rate movements. At the same time, the region exhibits significant heterogeneity in exchange rate regimes, from fixed pegs in GCC countries to managed or flexible regimes in several non-oil economies, underscoring the need for an analytical framework that can capture these structural differences while remaining policy-relevant. Macroeconomic dynamics in open economies are shaped by the interaction between exchange rate movements, price formation, and policy frameworks. In many Arab countries, these relationships are further influenced by the widespread use of foreign currency invoicing, particularly in US dollars and euros, and by differing pricing behaviors across markets. General Objective: Understanding how exchange rate fluctuations in small open-economy transmit to import prices, inflation, and output is essential for assessing economic performance and the effectiveness of policy responses under varying institutional settings. A Dynamic Stochastic General Equilibrium (DSGE) framework can be used to assess exchange rate pass-through (ERPT) to inflation in two selected Arab countries, with a particular focus on the role of currency pricing behavior and monetary policy design. The model will explicitly incorporate alternative pricing regimes, such as producer currency pricing (PCP) and local currency pricing (LCP), which are especially relevant in the region given the widespread use of foreign currency invoicing (notably the US dollar and the euro). By endogenizing the exchange rate, prices, and policy responses, the framework allows for a structural assessment of how exchange rate shocks transmit to import prices, consumer inflation, and output under different institutional settings. Duties and Responsibilities: The consultant will use and calibrate the DSGE framework using country-specific data, enabling the analysis of short-run and medium-run exchange rate pass-through, as well as its dependence on the nature of shocks (monetary, external demand, commodity price, or risk-premium shocks). Policy experiments will be conducted to compare alternative monetary policy regimes, including inflation targeting, exchange rate smoothing, and hybrid rules, and to assess how improvements in policy credibility can mitigate inflationary pressures stemming from exchange rate movements. For oil-exporting economy, the framework need to be adapted to account for hydrocarbon revenues and fiscal buffers, while for non-oil economies it focuses on vulnerabilities related to external financing and import costs. The results of this work will provide actionable policy insights for central banks and economic authorities in the Arab region, particularly in the context of ongoing or planned monetary reforms. By clarifying the channels through which exchange rate movements affect inflation and by quantifying the role of currency pricing and policy responses, the project will support evidence-based decisions on exchange rate management, inflation control, and policy sequencing.

An advanced university degree (master’s degree or equivalent) in economics, econometrics or related field is required. A PhD in economics, econometrics or related field is highly desirable. All candidates must submit a copy of the required educational degree. Incomplete applications will not be reviewed. A minimum of 15 years of progressively responsible experience in analyzing macroeconomic policy issues, particularly macro econometric modeling and forecasting exercises, is required. Familiarity with DSGE models is desirable. Knowledge of economic development issues of Arab countries is desirable. Publications in reputed journals in the field of macroeconomic policy issues, particularly macro econometric modeling and forecasting is desirable.

English and French are the working languages of the United Nations Secretariat; and Arabic is a working language of ESCWA. For this position, fluency in English is required. Note: “Fluency” equals a rating of ‘fluent’ in all four areas (speak, read, write, and understand) and “Knowledge of” equals a rating of ‘confident’ in two of the four areas.

Not available.

THE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.