Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

Malin Adolfson (), Stefan Laséen (), Jesper Lindé and Lars Svensson

No 14092, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports our view that the model parameters may be regarded as unaffected by the monetary policy specification. We discuss how monetary policy, and in particular the choice of output gap measure, affects the transmission of shocks. Finally, we use the model to assess the recent Great Recession in the world economy and how its impact on the economic development in Sweden depends on the conduct of monetary policy. This provides an illustration on how Rames incorporates large international spillover effects.

JEL-codes: E52 E58 F41 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-opm
Note: EFG IFM ME
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Citations: View citations in EconPapers (7)

Published as Malin Adolfson & Stefan Laséen & Jesper Lindé & Lars E.O. Svensson, 2011. "Optimal Monetary Policy in an Operational Medium‐Sized DSGE Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(7), pages 1287-1331, October.

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Related works:
Journal Article: Optimal Monetary Policy in an Operational Medium-Sized DSGE Model (2011)
Journal Article: Optimal Monetary Policy in an Operational Medium‐Sized DSGE Model (2011)
Working Paper: Optimal monetary policy in an operational medium-sized DSGE model (2011)
Working Paper: Optimal Monetary Policy in an Operational Medium-Sized DSGE Model (2008)
Working Paper: Optimal Monetary Policy in an Operational Medium-Sized DSGE Model (2008)
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