The Italian Block of the Escb Multi-Country Model

72 Pages Posted: 2 Aug 2006

See all articles by Elena Angelini

Elena Angelini

European Central Bank (ECB)

Antonello D'Agostino

European Stability Mechanism; Central Bank and Financial Services Authority of Ireland - Economic Analysis and Research Department

Peter McAdam

European Central Bank (ECB)

Date Written: July 2006

Abstract

This paper documents the structure, estimation and simulation properties of the Italian block of the ESCB-multi-country model (MCM). The model is used regularly as an input into Eurosystem projection exercises and, to a lesser extent, in simulation analysis. The specification of the Italian model follows closely that of the Area-Wide Model (AWM) and indeed the other MCM country blocks (in terms of specification and accounting framework). The MCM is a quarterly estimated structural macroeconomic model that treats the economy in a relatively closed manner. It has a long-run classical equilibrium with a vertical Phillips curve but with some short-run frictions in price/wage setting and factor demands. Consequently, activity is demand-determined in the short-run but supply-determined in the longer run with employment having converged to a level consistent with an exogenously given level of equilibrium unemployment. The precise properties of the model are illustrated using a number of standard variant simulations.

Keywords: Macro-econometric Modelling, Italy

JEL Classification: C3, C5, E1, E2

Suggested Citation

Angelini, Elena and D'Agostino, Antonello and McAdam, Peter, The Italian Block of the Escb Multi-Country Model (July 2006). ECB Working Paper No. 660, Available at SSRN: https://ssrn.com/abstract=913335 or http://dx.doi.org/10.2139/ssrn.913335

Elena Angelini (Contact Author)

European Central Bank (ECB) ( email )

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Frankfurt am Main, 60314
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49 69 1344 7912 (Phone)
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Antonello D'Agostino

European Stability Mechanism ( email )

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Luxembourg

Central Bank and Financial Services Authority of Ireland - Economic Analysis and Research Department ( email )

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Peter McAdam

European Central Bank (ECB) ( email )

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Eurotower
D-60311 Frankfurt am Main
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)