Application of the IS-MP-IA model to the German economy and policy implications
AbstractExtending the IS-MP-IA model developed by Romer (2000) and applying the GARCH (Engle, 1982, 2001) methodology, the author finds that equilibrium GDP in Germany is positively affected by stock market performance and real exchange rate appreciation, and negatively influenced by the expected inflation rate, the government deficit/GDP ratio, and the U.S. federal funds rate. The relatively low deficit/GDP ratio of 1.83% in 2003 indicates that its fiscal condition was healthy. However, some other EU members may need to exercise fiscal discipline. Because real appreciation has a positive impact on output, a stronger euro may not be a concern for Germany but may be worried by those EU member nations which depend upon exports to stimulate their economies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 15 (2005)
Issue (Month): 5 ()
Contact details of provider:
Find related papers by JEL classification:
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Collard, Fabrice & Dellas, Harris, 2002.
"Exchange rate systems and macroeconomic stability,"
Journal of Monetary Economics, Elsevier,
Elsevier, vol. 49(3), pages 571-599, April.
- Collard, Fabrice & Dellas, Harris, 2001. "Exchange Rate Systems and Macroeconomic Stability," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2768, C.E.P.R. Discussion Papers.
- Gianluigi Giorgioni & Ken Holden, 2003. "Ricardian equivalence, expansionary fiscal contraction and the stock market: a VECM approach," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 35(12), pages 1435-1443.
- John B. Taylor, 1999. "Introduction to "Monetary Policy Rules"," NBER Chapters, National Bureau of Economic Research, Inc, in: Monetary Policy Rules, pages 1-14 National Bureau of Economic Research, Inc.
- Morley, Samuel A, 1992. "On the Effect of Devaluation during Stabilization Programs in LDCs," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 21-27, February.
- M Bahmani-Oskooee & I Miteza, 2003. "Are Devaluations Expansionary or Contractionary? A survey article," Economic Issues Journal Articles, Economic Issues, Economic Issues, vol. 8(2), pages 1-28, September.
- Bravo, Ana Bela Santos & Silvestre, Antonio Luis, 2002. "Intertemporal sustainability of fiscal policies: some tests for European countries," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(3), pages 517-528, September.
- Robert Engle, 2001. "GARCH 101: The Use of ARCH/GARCH Models in Applied Econometrics," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 15(4), pages 157-168, Fall.
- Andreas Worms, 2003. "Interbank Relationships and the Credit Channel in Germany," Empirica, Springer, Springer, vol. 30(2), pages 179-198, June.
- Upadhyaya, Kamal P., 1999. "Currency devaluation, aggregate output, and the long run: an empirical study," Economics Letters, Elsevier, Elsevier, vol. 64(2), pages 197-202, August.
- Bruneau, Catherine & De Bandt, Olivier, 2003. "Monetary and fiscal policy in the transition to EMU: what do SVAR models tell us?," Economic Modelling, Elsevier, Elsevier, vol. 20(5), pages 959-985, September.
- Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 987-1007, July.
- Frederic S. Mishkin, 1995. "Symposium on the Monetary Transmission Mechanism," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(4), pages 3-10, Fall.
- Russell Davidson & James G. MacKinnon, 1985. "Testing Linear and Loglinear Regressions against Box-Cox Alternatives," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 18(3), pages 499-517, August.
- John B. Taylor, 1999.
"A Historical Analysis of Monetary Policy Rules,"
NBER Chapters, National Bureau of Economic Research, Inc,
in: Monetary Policy Rules, pages 319-348
National Bureau of Economic Research, Inc.
- Robert J. Barro, 1988.
"The Ricardian Approach to Budget Deficits,"
Working Papers, Queen's University, Department of Economics
728, Queen's University, Department of Economics.
- Barro, Robert J, 1989. "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(2), pages 37-54, Spring.
- John B. Taylor, 1999. "Monetary Policy Rules," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number tayl99-1.
- Taylor, John B, 1998. "Applying Academic Research on Monetary Policy Rules: An Exercise in Translational Economics," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 66(0), pages 1-16, Supplemen.
- Edward, Sebastian, 1986.
"Are Devaluations Contractionary?,"
The Review of Economics and Statistics,
MIT Press, vol. 68(3), pages 501-08, August.
- Gali, Jordi, 1992.
"How Well Does the IS-LM Model Fit Postwar U.S. Data,"
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 107(2), pages 709-38, May.
- Tom Doan, . "RATS programs to replicate Gali's QJE 1992 results," Statistical Software Components RTZ00063, Boston College Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.