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Simulation, estimation and welfare implications of monetary policies in a 3-country NOEM model

Author

Listed:
  • Joseph Plasmans

    () (Department of Economics, University of Antwerp)

  • Tomasz Michalak

    () (Department of Economics, University of Antwerp)

  • Jorge Fornero

    () (Department of Economics, University of Antwerp)

Abstract

In this paper we derive a microfounded macro New Keynesian model for open economies, be them large or small. We consider habit formation in consumption, sectoral linkages, domestic and foreign governments, tradable and non-tradable final and intermediate goods and imperfect pass-through in these sectors. Sticky nominal prices and wages are modeled in a Calvo way. The model economy is composed of a continuum of infinitely-lived consumers and producers for three regions (countries). Numerical simulations and econometric estimations are presented with a focus on a small open economy member of the EMU. Welfare implications of the involved price and wage rigidities are discussed

Suggested Citation

  • Joseph Plasmans & Tomasz Michalak & Jorge Fornero, 2006. "Simulation, estimation and welfare implications of monetary policies in a 3-country NOEM model," Working Paper Research 94, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:200610-6
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp94.pdf
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    Cited by:

    1. Moons, Cindy, 2009. "An Estimated Two-Country DSGE Model: losses from UK membership in EMU," Working Papers 2009/23, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    2. Boldea, O. & Engwerda, J.C. & Michalak, T. & Plasmans, J.E.J. & Salmah, S., 2011. "A Simulation Study of an ASEAN Monetary Union (Replaces CentER DP 2010-100)," Discussion Paper 2011-098, Tilburg University, Center for Economic Research.
    3. Geert Langenus, 2006. "Fiscal sustainability indicators and policy design in the face of ageing," Working Paper Research 102, National Bank of Belgium.
    4. Engwerda, J. & Boldea, O. & Michalak, T. & Plasmans, J. & Salmah,, 2012. "A simulation study of an ASEAN monetary union," Economic Modelling, Elsevier, vol. 29(5), pages 1870-1890.
    5. Luca PENSIEROSO, 2010. "The Great Depression in Belgium: an Open-Economy Analysis," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

    More about this item

    Keywords

    New Keynesian open economy model; tradable and non-tradable sectors; final and intermediate goods; monetary policy rules; numerical simulations; Bayesian estimation; welfare implications;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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