Actual and perceived monetary policy rules in a dynamic general equilibrium model of the euro area
We present a dynamic general equilibrium model with some nominal rigidities and calibrate it to euro area data. The most important features of the model include consumption/saving decisions according to Blanchard’s stochastic lifetimes approach; valuation of private financial wealth according to the present value of capital income; overlapping Calvo wage contracts in the labour market; and a neoclassical supply side with Cobb-Douglas technology. The model is developed for use in analysing differences between perceived and actual monetary policy rules, which is then done as a means of evaluating the macroeconomic benefits of credibility in monetary policy. General properties of the model are analysed with a variety of simulation experiments.
|Date of creation:||12 Mar 2001|
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CFS Working Paper Series
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- Coenen, Günter & Wieland, Volker, 2000. "A small estimated euro area model with rational expectations and nominal rigidities," Working Paper Series 0030, European Central Bank.
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- Mattila, Veli-Matti, 1998. "Simulating the Effects of Imperfect Credibility: How Does the Peso Problem Affect the Real Economy?," Research Discussion Papers 24/1998, Bank of Finland.
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