A Basic DSGE Model of the Czech Economy
| Authors | |
|---|---|
| Year of publication | 2008 |
| Type | Article in Proceedings |
| Conference | Mathematical Methods in Economics 2008 |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | NK DSGE model - output growth rule model - Taylor rule - inflation targeting - Bayesian estimation - rational expectations |
| Description | The paper introduces a basic New Keynesian Dynamic Stochastic General Equilibrium (NK DSGE) model of the Czech economy. It is a closed economy model with tradable and non-tradable sectors based on microeconomic foundations. The model consists of representative agents. Behavior of a representative household contains rigidities in consumption in a form of a habit formation. Price setting behavior of a representative firm is described by the Calvo style (with a result in a New Keynesian Phillips Curve, NKPC). Central monetary authority implements monetary policy according to a modified Taylor rule (output growth rule model) in the inflation targeting regime. A Bayesian method is used for the estimation of the linearized model equations. A basic analysis of the estimated model is carried out through a description of parameters and impulse response functions analysis. The model seems to be a suitable approximation of the Czech economy behavior and it can be extended to a form of a more complex model structure. |
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