Nominal Rigidities in an Estimated Two Country

Riccardo Cristadoro, Andrea Gerali (), Stefano Neri and Massimiliano Pisani

No 162, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: This paper uses bayesian techniques to estimate a small-scale two country model based on the Euro Area and the U.S. data. The model, based on the New Open Economy Macroeconomics framework, is microfounded and characterized by nominal price rigidities, a nontradable sector, home bias in consumption and incomplete financial markets at international level. Two versions of the model are estimated: in one the international law of one price for tradable goods holds, in the other there is international price discrimination. Several results emerge. First, nominal rigidities are quite symmetric across countries. Second, Euro Area and U.S. monetary policies are different; in particular, U.S policy makers seems to be relatively more aggressive against inflation. Third, international spillovers are low

Keywords: Macroeconomic simulation; Bayesian Estimation; Non-traded goods; Distribution costs (search for similar items in EconPapers)
JEL-codes: C32 E00 (search for similar items in EconPapers)
Date: 2006-07-04
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecfa:162

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