An Estimated Dynamic Stochastic General Equilibrium Model of the Jordanian Economy
This paper presents and estimates a small open economy dynamic stochastic general-equilibrium model (DSGE) for the Jordanian economy. The model features nominal and real rigidities, imperfect competition and habit formation in the consumerâ€™s utility function. Oil imports are explicitly modeled in the consumption basket and domestic production. Bayesian estimation methods are employed on quarterly Jordanian data. The modelâ€™s properties are described by impulse response analysis of identified structural shocks pertinent to the economy. These properties assess the effectiveness of the pegged exchange rate regime in minimizing inflation and output trade-offs. The estimates of the structural parameters fall within plausible ranges, and simulation results suggest that while the peg amplifies output, consumption and (price and wage) inflation volatility, it offers a relatively low risk premium.
|Date of creation:||01 Feb 2011|
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- Jesus Fernández-Villaverde & Juan F. Rubio-Ramírez, 2001.
"Comparing dynamic equilibrium economies to data,"
FRB Atlanta Working Paper
2001-23, Federal Reserve Bank of Atlanta.
- Stephanie Schmitt-Grohe & Martin Uribe, 2005. "Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model: Expanded Version," NBER Working Papers 11417, National Bureau of Economic Research, Inc.
- Magda E. Kandil & S. Beidas, 2005. "Setting the Stage for a National Currency in the West Bank and Gaza; The Choice of Exchange Rate Regime," IMF Working Papers 05/70, International Monetary Fund.
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