The Analytics of the New Keynesian 3-Equation Model

Poutineau, J. C., & Sobczak, K & Vermandel, G. (2015). The analytics of the New Keynesian 3-equation Model. Economics and Business Review, Vol. 1 (15), No. 2, 2015: 110–129.

28 Pages Posted: 26 Sep 2015

See all articles by Jean‐Christophe Poutineau

Jean‐Christophe Poutineau

Université de Rennes 1

Karolina Sobczak

Poznan University of Economics - Department of Money Theory and Monetary Policy

Gauthier Vermandel

Department of Economics, Paris-Dauphine

Date Written: January 25, 2015

Abstract

This paper aims at providing a self contained presentation of the ideas and solution procedure of New Keynesian Macroeconomics models. Using the benchmark “3 equation model”, we introduce the reader to an intuitive, static version of the model before incorporating more technical aspects associated with the dynamic nature of the model. We then discuss the relative contribution of supply, demand and policy shocks to the fluctuations of activity, inflation and interest rate, depending on the key underlying parameters of the economy.

Keywords: dynamic IS curve, impulse response analysis, New Keynesian Macro-economics, New Keynesian Phillips Curve, output gap, Taylor rule

JEL Classification: C63, E12, E32, E52

Suggested Citation

Poutineau, Jean-Christophe and Sobczak, Karolina and Vermandel, Gauthier, The Analytics of the New Keynesian 3-Equation Model (January 25, 2015). Poutineau, J. C., & Sobczak, K & Vermandel, G. (2015). The analytics of the New Keynesian 3-equation Model. Economics and Business Review, Vol. 1 (15), No. 2, 2015: 110–129.. Available at SSRN: https://ssrn.com/abstract=2665615

Jean-Christophe Poutineau

Université de Rennes 1 ( email )

11 Rue Jean Macé
Rennes, Rennes 35700
France

Karolina Sobczak

Poznan University of Economics - Department of Money Theory and Monetary Policy ( email )

Poznan, 60-967
Poland

Gauthier Vermandel (Contact Author)

Department of Economics, Paris-Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

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