A Small New Keynesian Model of Slovakia
| Authors | |
|---|---|
| Year of publication | 2009 |
| Type | Article in Proceedings |
| Conference | Mathematical Methods in Economics 2009 |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | NK DSGE model; nominal rigidity; real rigidity; small open economy; Slovakia |
| Description | This paper deals with a small open economy New Keynesian Dynamic Stochastic General Equilibrium (NK DSGE) model and its ability to describe behaviour of the Slovak economy. The model framework consists of three home subjects: households, firms and a monetary authority. The representative household maximizes its utility function which contains a real rigidity in consumption in a form of a habit formation. The monopolistic competitive firms maximize their net present value of dividends (their profits) with respect to Calvo-type price setting. The sticky price setting of home producers and importers represents nominal rigidities in the model. Monetary policy is conducted according to a Taylor-type rule. The model includes exogenous foreign sector which is represented by Euroarea-12. Evaluation of the model for Slovakia is based on an analysis of impulse response functions and an assessment of estimated parameters. We compare consistency of our results with similar studies. |
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