A Three-Country Macroeconomic Model for Portugal

21 Pages Posted: 23 Jan 2020

Date Written: December 2019


This paper outlines a simple three-country macroeconomic model designed to focus on the transmission of external shocks to Portugal. Building on the framework developed by Berg et al (2006), this model differentiates between shocks originating from both inside and outside the euro area, as well as domestic shocks, each of which have different implications for Portugal. This framework is also used to consider the dynamics of the Portuguese economy over recent decades. The model, which is designed to guide forecasts and undertake simulations, can easily be modified for use in other small euro area countries.

Keywords: Nominal effective exchange rate, Real interest rates, Negative interest rates, External sector, Financial crises, Portugal, euro area, macroeconomic modeling, Bayesian estimation, WP, output gap, real exchange rate, exchange rate, Phillips curve

JEL Classification: E6, F3, E01, O24, E52, G21, E31

Suggested Citation

Pienkowski, Alex, A Three-Country Macroeconomic Model for Portugal (December 2019). IMF Working Paper No. 19/281, Available at SSRN: https://ssrn.com/abstract=3524302

Alex Pienkowski (Contact Author)

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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