Abstract

http://ssrn.com/abstract=1689429
 
 

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Citations (10)



 


 



Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model


Frank Smets


European Central Bank (ECB); KU Leuven - Center for Economic Studies

Jean-Guillaume Sahuc


Banque de France - Centre de Recherche

September 2007

Banque de France Working Paper No. 182

Abstract:     
Using two estimated models for the euro area and the United States, this paper investigates whether the observed difference in the amplitude of the interest rate cycle since 1999 in both areas is due to differences in the estimated monetary policy reaction function, differences in the structure of the economy or differences in the size and nature of the shocks hitting both economies. The paper concludes that differences in the type, size and persistence of shocks in both areas can largely explain the different interest rate setting.

Number of Pages in PDF File: 29

Keywords: Policy activism, DSGE model, interest rates, macroeconomic shocks

JEL Classification: C51, E52, E58

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Date posted: October 9, 2010  

Suggested Citation

Smets, Frank and Sahuc, Jean-Guillaume, Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model (September 2007). Banque de France Working Paper No. 182. Available at SSRN: http://ssrn.com/abstract=1689429 or http://dx.doi.org/10.2139/ssrn.1689429

Contact Information

Frank Smets (Contact Author)
European Central Bank (ECB) ( email )
Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany
+49 69 1344 6550 (Phone)
+49 69 1344 6575 (Fax)
KU Leuven - Center for Economic Studies ( email )
Naamsestraat 69
Leuven, B-3000
Belgium
Jean-Guillaume Sahuc
Banque de France - Centre de Recherche ( email )
31 rue Croix des Petits Champs
75049 Paris Cedex 01
France
+33 1 42 92-49-52 (Phone)
+33 1 42-92-62-92 (Fax)
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