Getting to Know the Global Economy Model and Its Philosophy

Douglas Laxton

IMF Staff Papers, 2008, vol. 55, issue 2, 213-242

Abstract: This paper provides a nontechnical introduction to the IMF's Global Economy Model (GEM). GEM is a modern dynamic stochastic general equilibrium (DSGE) model that has been designed for studying a range of issues that cannot be adequately addressed with reduced-form econometric models or an earlier generation of macromodels whose dynamic equations were not based on strong choice-theoretic foundations. Unlike earlier models, which were viewed as black boxes by many outsiders, GEM's theoretical structure is much better connected with work in the academic community, making it considerably easier for outside researchers to apply it and extend it for their own work. To understand the basic philosophy behind GEM, we start by using the issue of exchange rate pass-through to understand how adding additional features to the model allows one to better understand issues related to the magnitude of exchange rate pass-through. We then provide a nontechnical introduction to what needs to be known to develop a steady-state calibration of the model. Finally, we end by summarizing other work on DSGE modeling at the IMF and lay out a few major priorities for the future. IMF Staff Papers (2008) 55, 213–242; doi:10.1057/imfsp.2008.11

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.palgrave-journals.com/imfsp/journal/v55/n2/pdf/imfsp200811a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/imfsp/journal/v55/n2/full/imfsp200811a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:55:y:2008:i:2:p:213-242

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().