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Supply Shocks and Optimal Monetary Policy in the Euro ZonePatrick FeveUniversity of Toulouse 1 - Toulouse School of Economics (TSE) Julien MatheronBanque de France Jean-Guillaume SahucBanque de France - Centre de Recherche February 2008 Banque de France Working Paper No. 200 Abstract: This article assesses monetary policy's performances in the Euro zone in the face of supply shocks. We determine the responses of output, inflation, labor share and the nominal interest rate to a supply shock as identified through a structural VAR model. We then develop a DSGE model with nominal rigidities subject to the optimal monetary policy. The model is estimated and tested on the basis of its ability to reproduce the responses drawn from the VAR model. Our results suggest that assuming optimal monetary policy allows for a satisfying fit to the data.
Note: Downloadable document is in French. Number of Pages in PDF File: 17 Keywords: Supply shocks, SVAR, Optimal Monetary Policy JEL Classification: E31, E32, E52 working papers seriesDate posted: September 22, 2010Suggested CitationContact Information
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