IDEAS home Printed from
   My bibliography  Save this paper

Construction of a New Keynesian DSGE Model ( Algeria's Monetary policy approach)


  • Saloua Chaouche

    () (High scholl of applied statistic and economic)

  • Rachid Toumache

    () (High scholl of applied statistic and economic)


The aim of the paper is to describe the theoretical structure of a New Keynesian DSGE model with sticky prices and wages , as well as a Taylor rule as monetary policy for the Algerian economy.Moreover, the clear specification of the stochastic shocks allows one to identify the source of economic fluctuations, the model incorporates various other features such as habit formation.We used the calibration/estimated strategy on key macro-economic variables: GDP, consumption, prices, real wages, employment and the nominal interest rate.The introduction of two orthogonal structural shocks including productivity, policy shocks allows for an empirical investigation of the effects of such shocks and of their contribution to business cycle fluctuations in the Algerian economy. Having as benchmark the model of Smets and Wouters (2003, 2007,2011), and Gali (1999). The thesis describes how the model works, how it is estimated, and how it is used for monetary policy analysis. The parameters of the New Keynesian DSGE model are calibrated in such a way that selected theoretical moments given by the model match as closely as possible those observed in the data. One way of achieving this, is by minimizing some distance function between the theoretical and empirical moments of interest. The output of the simulator is posterior estimates of The New Keynesian DSGE models, are summarized and compared to results in the existing literature.

Suggested Citation

  • Saloua Chaouche & Rachid Toumache, 2017. "Construction of a New Keynesian DSGE Model ( Algeria's Monetary policy approach)," Proceedings of International Academic Conferences 5808143, International Institute of Social and Economic Sciences.
  • Handle: RePEc:sek:iacpro:5808143

    Download full text from publisher

    File URL:
    File Function: First version, 2017
    Download Restriction: no

    More about this item


    New Keynesian DSGE model; Monetary policy; Calibration/estimation strategy; Taylor rule; Sticky prices; Sticky wages.;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iacpro:5808143. 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: (Klara Cermakova). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.