Simple Model for a Small Open Economy: An Application to the ASEAN-5 Countries
This paper examines the suitability of a simple structural small open economy model in characterising the economic dynamics in five ASEAN economies. The model is a variant of a small open economy model with imperfect competition and nominal rigidities. It is then confronted to the data using maximum likelihood estimation. The structure of the underlying model is able to produce estimated parameters that largely capture the economic characteristics and dynamics of each of the economies in a plausible manner. It enables one to compare and contrast the behaviour of the five economies under consideration, particularly their monetary transmission mechanism. The estimation results are then used to revisit the structural shocks correlation issue in the region, and can also be used as the basis for constructing the relevant approximation for the aggregate welfare function for each of the economies.
|Date of creation:||May 2008|
|Date of revision:||May 2008|
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- Arief Ramayandi, 2006. "Reliability of Structural Shocks Estimates from a Bivariate SVAR Model: The Case of Southeast Asian Countries," Asia Pacific Economic Papers 357, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
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- Eric Parrado, 2004. "Singapore's Unique Monetary Policy; How Does it Work?," IMF Working Papers 04/10, International Monetary Fund.
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