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The Ifo DSGE Model for the German Economy

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  • Nikolay Hristov

Abstract

This paper estimates a medium-scale open economy DSGE model for Germany and the rest of the Euro Area (REA). The parameter estimates indicate that there is a modest degree of structural heterogeneity between Germany and the rest of the Euro Area. In particular, (i) the private sector in Germany tends to adjust its capital stock faster than its counterpart in the REA, (ii) the innovations to government spending as well as those to the degree of competition in goods markets are relatively more volatile in Germany and (iii) nominal prices and wages appear to be slightly more flexible in Germany than in the REA. A comparison based on marginal likelihoods shows that the DSGE model fits the observable macroeconomic time series similarly well as unrestricted Bayesian VARs (BVARs) estimated on the same data set.

Suggested Citation

  • Nikolay Hristov, 2016. "The Ifo DSGE Model for the German Economy," ifo Working Paper Series 210, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_210
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Timo Wollmershäuser & Wolfgang Nierhaus & Nikolay Hristov & Dorine Boumans & Johanna Garnitz & Marcell Göttert & Christian Grimme & Stefan Lauterbacher & Robert Lehmann & Wolfgang Meister & Magnus Rei, 2016. "ifo Konjunkturprognose 2016–2018: Robuste deutsche Konjunktur vor einem Jahr ungewisser internationaler Wirtschaftspolitik," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(24), pages 28-73, December.
    2. repec:ces:ifosdt:v:71:y:2018:i:12:p:33-87 is not listed on IDEAS

    More about this item

    Keywords

    DSGE model; German economy; monetary union; Bayesian estimation.;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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