MEDEA: A DSGE Model for the Spanish Economy

72 Pages Posted: 6 May 2009

See all articles by Pablo Burriel

Pablo Burriel

Banco de España

Jesús Fernández-Villaverde

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Juan Francisco Rubio-Ramirez

Federal Reserve Bank of Atlanta - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: May 4, 2009

Abstract

In this paper, we provide a brief introduction to a new macroeconometric model of the Spanish economy named MEDEA (Modelo de Equilibrio Dinámico de la Economía EspañolA). MEDEA is a dynamic stochastic general equilibrium (DSGE) model that aims to describe the main features of the Spanish economy for policy analysis, counterfactual exercises, and forecasting. MEDEA is built in the tradition of New Keynesian models with real and nominal rigidities, but it also incorporates aspects such as a small open economy framework, an outside monetary authority such as the ECB, and population growth, factors that are important in accounting for aggregate fluctuations in Spain. The model is estimated with Bayesian techniques and data from the last two decades. Beyond describing the properties of the model, we perform different exercises to illustrate the potential of MEDEA, including historical decompositions, long-run and short-run simulations, and counterfactual experiments.

Keywords: DSGE Models, Likelihood Estimation, Bayesian Methods

JEL Classification: C11, C13, E30

Suggested Citation

Burriel, Pablo and Fernández-Villaverde, Jesús and Rubio-Ramirez, Juan Francisco, MEDEA: A DSGE Model for the Spanish Economy (May 4, 2009). PIER Working Paper No. 09-017. Available at SSRN: https://ssrn.com/abstract=1400124 or http://dx.doi.org/10.2139/ssrn.1400124

Pablo Burriel

Banco de España ( email )

Madrid 28014
Spain

Jesús Fernández-Villaverde (Contact Author)

University of Pennsylvania - Department of Economics ( email )

3718 Locust Walk
160 McNeil Building
Philadelphia, PA 19104
United States
215-898-1504 (Phone)
215-573-2057 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Juan Francisco Rubio-Ramirez

Federal Reserve Bank of Atlanta - Research Department ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404-498-8057 (Phone)
404-498-8956 (Fax)

HOME PAGE: http://www.econ.umn.edu/~rubio

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