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Towards New Open Economy Macroeconometrics

  • Fabio Ghironi

    ()

    (Boston College)

I estimate the structural parameters of a small open economy model using data from Canada and the United States. The model improves upon the recent literature in open economy macroeconomics from an empirical perspective. I estimate parameters by using non-linear least squares at the single-equation level. Estimates of most parameters are characterized by small standard errors and are in line with the findings of other studies. I also develop a plausible way of constructing measures for non-observable variables. To verify if multiple-equation regressions yield significantly different estimates, I run full information maximum likelihood, system-wide regressions. The results of the two procedures are similar. Finally, I illustrate a practical application of the model, showing how a shock to the U.S. economy is transmitted to Canada under an inflation targeting monetary regime.

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Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 469.

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Length: 32 pages
Date of creation: 23 Feb 2000
Date of revision:
Handle: RePEc:boc:bocoec:469
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Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA

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Web page: http://fmwww.bc.edu/EC/
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