Publication details
Small DSGE model for the Czech economy
| Authors | |
|---|---|
| Year of publication | 2009 |
| Type | Article in Proceedings |
| Conference | Mathematical Methods in Economics 2009 |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | NK DSGE model; modified Taylor rule; inflation targeting; Bayesian estimation; wage and labor rigidity |
| Description | The paper introduces a New Keynesian Dynamic Stochastic General Equilibrium (NK DSGE) model of the Czech economy. It is a closed economy model strictly based on microeconomic foundations. The model consists of three representative agents. Behavior of a representative household contains rigidities in consumption in a form of a habit formation. A production sector is divided between tradables and non-tradables. Price setting behavior of a representative firm in both sectors is described by the Calvo style resulting into a New Keynesian Phillips Curves (NKPCs). Monetary authority implements monetary policy according to a modified Taylor rule in the inflation targeting regime. The model contains extra rigidities connected to labor market (wages NKPC and labor adjustment costs). A Bayesian method is used for the estimation of the linearized model equations. A basic analysis of the estimated model is carried out through parameters description and impulse response functions. The model seems to offer a suitable approximation of the Czech economy behavior with respect to its structure. |
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