Evaluating a Monetary Business Cycle Model with Unemployment for the Euro Area
National Bank of Belgium Working Paper No. 173
49 Pages Posted: 28 Sep 2010
Date Written: July 27, 2009
This paper estimates a medium-scale DSGE model with search unemployment by matching model and data spectra. Price mark-up shocks emerge as the main source of business-cycle fluctuations in the euro area. Key factors in the propagation of these disturbances are a high degree of inflation indexation and a persistent response of monetary policy to deviations from the inflation target.
Keywords: DSGE models, business cycles, frequency-domain analysis
JEL Classification: E32, C51, C52
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