Introducing KITT: The Reserve Bank of New Zealand new DSGE model for forecasting and policy design

Kirdan Lees

Reserve Bank of New Zealand Bulletin, 2009, vol. 72, pages 5-20

Abstract: The Reserve Bank of New Zealand has developed a new core macroeconomic model to replace the existing FPS (Forecasting and Policy System) model. KITT (Kiwi Inflation Targeting Technology), the new model, advances our modelling towards the frontier in terms of both theory and empirics. KITT reconfirms the Reserve Bank’s commitment to having a theoretically well-founded model at the heart of the monetary policy process. This article provides context about the reasons for the move to the new model, and an overview of the model itself. KITT builds a rich picture of the macroeconomic economy from specific assumptions about the microeconomic behaviour of households and firms that interact in several goods markets. The article illustrates the structure of the model, how this structure determines the way in which shocks or unexpected events propagate through the economy, and the role of the model in the forecast process.

Date: 2009

Downloads: (external link)
http://www.rbnz.govt.nz/research/bulletin/2007_2011/2009jun72_2lees.pdf

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: http://EconPapers.repec.org/RePEc:nzb:nzbbul:june2009:2

Access Statistics for this article

More articles in Reserve Bank of New Zealand Bulletin from Reserve Bank of New Zealand
Contact information at EDIRC.
Series data maintained by Reserve Bank of New Zealand Knowledge Centre ().