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An Estimated DSGE Model Under the New Keynesian Framework for Mexico

Author

Listed:
  • Alejandro Steven Fonseca-Zendejas

    (Universidad Loyola Andalucía)

  • Carmen Borrego-Salcido

    (Instituto Politécnico Nacional (IPN))

  • Francisco Venegas-Martínez

    (Instituto Politécnico Nacional (IPN))

Abstract

This study develops and estimates a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model tailored to the Mexican economy using for calibration Bayesian techniques. The model highlights the interactions among the households, the firms, and the central bank, focusing on the impacts of monetary policy, inflation, and technology shocks. Impulse response functions and variance decomposition are employed to assess the dynamic effects of these shocks on key macroeconomic variables. The findings emphasize the significant role of the Mexican expansionary monetary policy in stimulating output in the short term, while inflationary pressures adversely affect economic activity. Based on the results, the technology shock has more persistent effects on output than inflation. This analysis underscores the model usefulness for understanding policy decisions in emerging markets like Mexico.

Suggested Citation

  • Alejandro Steven Fonseca-Zendejas & Carmen Borrego-Salcido & Francisco Venegas-Martínez, 2025. "An Estimated DSGE Model Under the New Keynesian Framework for Mexico," Computational Economics, Springer;Society for Computational Economics, vol. 66(2), pages 1297-1320, August.
    • Handle: RePEc:kap:compec:v:66:y:2025:i:2:d:10.1007_s10614-024-10742-x
    DOI: 10.1007/s10614-024-10742-x
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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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