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Structural heterogeneity or asymmetric shocks? Poland and the euro area through the lens of a two-country DSGE model

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Abstract

This paper presents a two-country model linking Poland and the euro area and applies it for assessment of heterogeneity across these two regions. Overall, our results can be seen as rather inconclusive about the differences in parameters describing agents’ decision-making in Poland and in the euro area. On the contrary, we find strong evidence for heterogeneity in terms of volatility and synchronization of shocks hitting both economies. Our results may be viewed as a step towards estimating the costs of Poland’s entry to the European Monetary Union, associated with giving up the monetary autonomy and losing benefits from stabilizing movements of the exchange rate.

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Bibliographic Info

Paper provided by National Bank of Poland, Economic Institute in its series National Bank of Poland Working Papers with number 49.

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Length: 50
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:nbp:nbpmis:49

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Keywords: two-country DSE; Bayesian estimation; heterogenity;

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Citations

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Cited by:
  1. Andrzej Torój, 2012. "Andrzej Torój - Poland and Slovakia during the crisis: would the euro (non-)adoption matter?," Working Papers 13, Ministry of Finance in Poland.
  2. Michał Brzoza-Brzezina & Krzysztof Makarski & Grzegorz Wesołowski, 2012. "Would it have paid to be in the eurozone?," National Bank of Poland Working Papers 128, National Bank of Poland, Economic Institute.
  3. Andrzej Torój & Karolina Konopczak, 2012. "Crisis Resistance Versus Monetary Regime: A Polish–Slovak Counterfactual Exercise," Central European Journal of Economic Modelling and Econometrics, CEJEME, vol. 4(1), pages 1-22, March.
  4. Michał Brzoza-Brzezina & Pascal Jacquinot & Marcin Kolasa, 2011. "Can we prevent boom-bust cycles during euro area accession?," National Bank of Poland Working Papers 79, National Bank of Poland, Economic Institute.
  5. Piotr Krajewski, 2012. "Tax Rates Impact on GDP in Poland," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 7, pages 27-42.
  6. Michał Brzoza-Brzezina & Krzysztof Makarski, 2010. "Credit Crunch in a Small Open Economy," National Bank of Poland Working Papers 75, National Bank of Poland, Economic Institute.
  7. Haider, Adnan & Din, Musleh-ud & Ghani, Ejaz, 2012. "Monetary policy, informality and business cycle fluctuations in a developing economy vulnerable to external shocks," MPRA Paper 42484, University Library of Munich, Germany.
  8. Pentecôte, Jean-Sébastien & Huchet-Bourdon, Marilyne, 2012. "Revisiting the core-periphery view of EMU," Economic Modelling, Elsevier, vol. 29(6), pages 2382-2391.
  9. Andrzej Torój, 2010. "Rationality of expectations: another OCA criterion? A DSGE analysis," Working Papers 8, Ministry of Finance in Poland.
  10. Łukasz Goczek & Dagmara Mycielska, 2013. "Ready for euro? Empirical study of the actual monetary policy independence in Poland," Working Papers 2013-13, Faculty of Economic Sciences, University of Warsaw.
  11. Andrzej Toroj, 2011. "Competitiveness channel in Poland and Slovakia: a pre-EMU DSGE analysis," National Bank of Poland Working Papers 86, National Bank of Poland, Economic Institute.
  12. Marcin Kolasa, 2013. "Business cycles in EU new member states: How and why are they different?," National Bank of Poland Working Papers 156, National Bank of Poland, Economic Institute.
  13. repec:onb:oenbwp:y:2011:i:2:b:1 is not listed on IDEAS
  14. Mehrotra, Aaron & Crespo Cuaresma, Jesús & Eller, Markus, 2011. "The Economic transmission of fiscal policy shocks from Western to Eastern Europe," BOFIT Discussion Papers 12/2011, Bank of Finland, Institute for Economies in Transition.
  15. Martin SLANICAY, 2013. "Business Cycle Synchronization through the Lens of a DSGE Model," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(2), pages 180-196, May.
  16. Michał Gradzewicz & Krzysztof Makarski, 2009. "The Macroeconomic Effects of Losing Autonomous Monetary Policy after the Euro Adoption in Poland," National Bank of Poland Working Papers 58, National Bank of Poland, Economic Institute.
  17. Andrzej Toroj, 2009. "Macroeconomic adjustment and heterogeneity in the euro area," National Bank of Poland Working Papers 54, National Bank of Poland, Economic Institute.

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