Supply Shocks and Optimal Monetary Policy in the Euro Zone
University of Toulouse 1 - Toulouse School of Economics (TSE)
Banque de France
Banque de France - Centre de Recherche
Banque de France Working Paper No. 200
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, E52working papers series
Date posted: September 22, 2010
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