The banking and distribution sectors in a small open economy DSGE Model
The recent crisis has emphasized the role of financial - macroeconomic interactions, and international trade in goods and services, in the transmission of the shocks. Both phenomena, closely related to the higher degree of globalization, are very relevant for small open economies, and particularly so when a large share of the economy relies on financial and distribution services. Hence, in this paper we propose to incorporate the banking and distribution sectors into a medium scale DSGE model of a small open economy. As an illustration, the resulting model is then calibrated to match the specific characteristics of the Luxembourg economy, where the financial sector plays a key role. We believe that the results are also of more general interest for studying the reaction of small open economies to real and financial shocks. JEL Codes: E13; E32; Keywords: DSGE model, Small open economy, Banking, International trade, Luxembourg, Segmented labor market; Trade union
|Date of creation:||2012|
|Contact details of provider:|| Postal: via Rontgen, 1 - 20136 Milano (Italy)|
Web page: http://www.igier.unibocconi.it/
|Order Information:|| Web: http://www.igier.unibocconi.it/en/papers/index.htm Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006.
"Estimating trade restrictiveness indices,"
Policy Research Working Paper Series
3840, The World Bank.
- Lockwood, Ben, 1990. "Tax Incidence, Market Power, and Bargaining Structure," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 187-209, January.
- Kim, Jinill, 2004. "What determines aggregate returns to scale?," Journal of Economic Dynamics and Control, Elsevier, vol. 28(8), pages 1577-1594, June.
- Lawrence Christiano & Roberto Motto & Massimo Rostagno, 2007.
"Shocks, Structures or Monetary Policies? The Euro Area and US After 2001,"
NBER Working Papers
13521, National Bureau of Economic Research, Inc.
- Christiano, Lawrence & Motto, Roberto & Rostagno, Massimo, 2008. "Shocks, structures or monetary policies? The Euro Area and US after 2001," Journal of Economic Dynamics and Control, Elsevier, vol. 32(8), pages 2476-2506, August.
- Christiano, Lawrence & Motto, Roberto & Rostagno, Massimo, 2007. "Shocks, structures or monetary policies? The euro area and US after 2001," Working Paper Series 0774, European Central Bank.
- Backus, David & Henriksen, Espen & Storesletten, Kjetil, 2008.
"Taxes and the global allocation of capital,"
Journal of Monetary Economics,
Elsevier, vol. 55(1), pages 48-61, January.
- Deák, Szabolcs & Fontagné, Lionel & Maffezzoli, Marco & Marcellino, Massimiliano, 2011.
"LSM: A DSGE model for Luxembourg,"
Elsevier, vol. 28(6), pages 2862-2872.
- Szabolcs Deak & Lionel Fontagné & Massimiliano Marcellino & Marco Maffezzoli, 2011. "LSM: A DSGE Model for Luxembourg," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00639888, HAL.
- Mazzenga, Elisabetta & Ravn, Morten O, 2002.
"International Business Cycles: The Quantitative Role of Transportation Costs,"
CEPR Discussion Papers
3530, C.E.P.R. Discussion Papers.
- Ravn, Morten O. & Mazzenga, Elisabetta, 2004. "International business cycles: the quantitative role of transportation costs," Journal of International Money and Finance, Elsevier, vol. 23(4), pages 645-671, June.
- Schmitt-Grohé, Stephanie & Uribe, Martín, 2001.
"Optimal Fiscal and Monetary Policy Under Sticky Prices,"
CEPR Discussion Papers
2942, C.E.P.R. Discussion Papers.
- Schmitt-Grohe, Stephanie & Uribe, Martin, 2004. "Optimal fiscal and monetary policy under sticky prices," Journal of Economic Theory, Elsevier, vol. 114(2), pages 198-230, February.
- Martin Uribe & Stephanie Schmitt-Grohe, 2001. "Optimal fiscal and monetary policy under sticky prices," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
- Stephanie Schmitt-Grohe & Martin Uribe, 2002. "Optimal Fiscal and Monetary Policy Under Sticky Prices," NBER Working Papers 9220, National Bureau of Economic Research, Inc.
- Stephanie Schmitt-Grohe & Martin Uribe, 2001. "Optimal Fiscal and Monetary Policy Under Sticky Prices," Departmental Working Papers 200105, Rutgers University, Department of Economics.
- Andrea Gerali & Stefano Neri & Luca Sessa & Federico M. Signoretti, 2010.
"Credit and banking in a DSGE model of the euro area,"
Temi di discussione (Economic working papers)
740, Bank of Italy, Economic Research and International Relations Area.
- Andrea Gerali & Stefano Neri & Luca Sessa & Federico M. Signoretti, 2010. "Credit and Banking in a DSGE Model of the Euro Area," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 107-141, 09.
- Fujiwara, Ippei & Teranishi, Yuki, 2011.
"Real exchange rate dynamics revisited: A case with financial market imperfections,"
Journal of International Money and Finance,
Elsevier, vol. 30(7), pages 1562-1589.
- Fujiwara, Ippei & Teranishi, Yuki, 2010. "Real exchange rate dynamics revisited: a case with financial market imperfections," Globalization and Monetary Policy Institute Working Paper 62, Federal Reserve Bank of Dallas.
- Hilberg, Björn & Hollmayr, Josef, 2011. "Asset prices, collateral and unconventional monetary policy in a DSGE model," Working Paper Series 1373, European Central Bank.
- In't Veld, Jan & Raciborski, Rafal & Ratto, Marco & Roeger, Werner, 2011. "The recent boom-bust cycle: The relative contribution of capital flows, credit supply and asset bubbles," European Economic Review, Elsevier, vol. 55(3), pages 386-406, April.
- Elisabetta Mazzenga & Morten O. Ravn, 1998. "Relative price riddles in international business cycle theory: Are transport costs the explanation?," Economics Working Papers 312, Department of Economics and Business, Universitat Pompeu Fabra.
- Jermann, Urban J., 1998. "Asset pricing in production economies," Journal of Monetary Economics, Elsevier, vol. 41(2), pages 257-275, April.
- Matthieu Darracq Pariès & Christoffer Kok Sørensen & Diego Rodriguez-Palenzuela, 2011.
"Macroeconomic Propagation under Different Regulatory Regimes: Evidence from an Estimated DSGE Model for the Euro Area,"
International Journal of Central Banking,
International Journal of Central Banking, vol. 7(4), pages 49-113, December.
- Darracq Pariès, Matthieu & Kok, Christoffer & Rodriguez-Palenzuela, Diego, 2010. "Macroeconomic propagation under different regulatory regimes: Evidence from an estimated DSGE model for the euro area," Working Paper Series 1251, European Central Bank.
- Lawrence J. Christiano & Michele Boldrin & Jonas D. M. Fisher, 2001.
"Habit Persistence, Asset Returns, and the Business Cycle,"
American Economic Review,
American Economic Association, vol. 91(1), pages 149-166, March.
- Michele Boldrin & Lawrence J. Christiano & Jonas D. M. Fisher, 1999. "Habit persistence, asset returns and the business cycles," Working Paper Series WP-99-14, Federal Reserve Bank of Chicago.
- Michele Boldrin & Lawrence J. Christiano & Jonas D. M. Fisher, 2000. "Habit persistence, asset returns and the business cycle," Staff Report 280, Federal Reserve Bank of Minneapolis.
When requesting a correction, please mention this item's handle: RePEc:igi:igierp:454. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.