Modelo de equilibrio general dinámico y estocástico con rigideces nominales para el análisis de política y proyecciones en la República Dominicana[A stochastic and dynamic general equilibrium model with nominal rigidities for policy analysis and forecast in the Dominican Republic]

This paper specifies and estimates a structural model of a small open economy to the Dominican Republic. The objective is to provide an analytical framework based on a rigorous theoretical component, but also including aspects that capture satisfactorily the dynamics of macroeconomic variables and being empirically plausible for its use for forecasting and policy analysis. The structure adopted in the model specification is standard in the literature of small open economies and is based on the work of Galí and Monacelli (2005 ) , Justiniano and Preston (2005), Ercerg , Henderson and Levin (2000) and Lubik and Schorfheide ( 2005 ) . The model is characterized by relationships between macroeconomic aggregates that reflect the behavior of economic agents and the technical and institutional constraints they face . The economy is populated by four types of agents: households , producers and importers of differentiated final goods consumption , and a government run monetary policy to influence economic conditions . Households choose each period how much to consume and work , while firms choose price and quantity of goods to offer to meet the demand . The external sector of the economy is characterized by the export of a fraction of domestic production and imports of goods consumed domestically, where the proportions are determined by the relative prices of domestically produced goods relative to foreign . Households have access to two vehicles for mobilizing resources intertemporally , a domestic bond and one external . Finally, the government is characterize by the behavior of the Central Bank who adjust it policy rate to offset inflation and output deviations from their equilibrium levels.