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MUSE: Monetary Union and Slovak Economy model

  • Matus Senaj


    (National Bank of Slovakia, Research Departmen)

  • Milan Vyskrabka


    (National Bank of Slovakia, Monetary Policy Department)

  • Juraj Zeman


    (National Bank of Slovakia, Research Department)

In this paper, the Bayesian method together with the calibration approach is used to parameterise the DSGE model. We present a medium-scale two-country model. Parameters controlling the steady state of the model are calibrated in order to match the ratios of a few selected variables to their empirical counterparts. The remaining parameters are estimated via Bayesian method. Since Slovakia has been a euro area member country for only two years, the model allows switching from an autonomous monetary policy regime to a monetary union regime. This feature enables us to parameterise the model in the case of independent monetary policy and consequently to simulate the impacts of various structural shocks on the Slovak economy as a part of the monetary union. At the end of the paper, we present the impulse-response functions of the model to selected structural shocks.

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Paper provided by Research Department, National Bank of Slovakia in its series Working and Discussion Papers with number WP 1/2010.

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Length: 46 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:svk:wpaper:1010
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  11. Gomes, Sandra & Jacquinot, Pascal & Pisani, Massimiliano, 2010. "The EAGLE. A model for policy analysis of macroeconomic interdependence in the euro area," Working Paper Series 1195, European Central Bank.
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  16. Juraj Zeman & Matus Senaj, 2009. "DSGE Model-Slovakia," Working and Discussion Papers WP 3/2009, Research Department, National Bank of Slovakia.
  17. Vanda Almeida, 2009. "Bayesian estimation of a DSGE model for the Portuguese economy," Working Papers w200914, Banco de Portugal, Economics and Research Department.
  18. Sungbae An & Frank Schorfheide, 2007. "Bayesian Analysis of DSGE Models," Econometric Reviews, Taylor & Francis Journals, vol. 26(2-4), pages 113-172.
  19. Pytlarczyk, Ernest, 2005. "An estimated DSGE model for the German economy within the euro area," Discussion Paper Series 1: Economic Studies 2005,33, Deutsche Bundesbank, Research Centre.
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