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DSGE modelling for the UK economy 1974–2017

Author

Listed:
  • Ioannis Litsios
  • Keith Pilbeam
  • Dimitrios Asteriou

Abstract

We build four different dynamic stochastic general equilibrium (DSGE) models for a small open economy reflecting both neoclassical and Keynesian specifications. A DSGE model with full price and wage flexibility is initially constructed and then modified through nominal wage and price rigidities. The ability of the models to replicate important features of the business cycle activity in the UK is explored through statistical and econometric analysis. Evidence suggests that a monetary shock under the Taylor model with price stickiness can replicate a significant portion of the business cycle activity in the UK economy.

Suggested Citation

  • Ioannis Litsios & Keith Pilbeam & Dimitrios Asteriou, 2021. "DSGE modelling for the UK economy 1974–2017," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 295-323, April.
    • Handle: RePEc:bla:buecrs:v:73:y:2021:i:2:p:295-323
    DOI: 10.1111/boer.12255
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    References listed on IDEAS

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