Noname - A new quarterly model for Belgium
AbstractThis paper gives an overview of the present version of the quarterly model for the Belgian economy built at the National Bank of Belgium (NBB). This model can provide quantitative input into the policy analysis and projection processes within a framework that has explicit micro-foundations and expectations. This new version is also compatible with the ESA95 national accounts. This model called Noname is relatively compact. The intertemporal optimisation problem of households and firms is subject to polynomial adjustment costs, which yields richer dynamic specifications than the more usual quadratic cost function. Other characteristics are: pricing-to-market and hence flexible mark-ups and incomplete pass-through, a CES production function with an elasticity of substitution between capital and labour below one, time-dependent wage contracting à la Dotsey, King and Wollman. Most of the equations taken individually have acceptable statistical properties and diagnostic simulations suggest that the impulse responses of the model to exogenous shocks are reasonable. Its structure allows simulations to be conducted under the assumption of rational expectations as well as under alternative expectations formations.
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Research with number 68.
Length: 71 pages
Date of creation: May 2005
Date of revision:
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Econometric modelling; Pricing-to-market; CES production function; Wage bargaining; Polynomial adjustment costs; Rational expectations.;
Other versions of this item:
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-29 (All new papers)
- NEP-CMP-2005-05-29 (Computational Economics)
- NEP-EEC-2005-05-29 (European Economics)
- NEP-MAC-2005-05-29 (Macroeconomics)
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