A Three-Country Macroeconomic Model for Portugal

Alex Pienkowski

No 2019/281, IMF Working Papers from International Monetary Fund

Abstract: This paper outlines a simple three-country macroeconomic model designed to focus on the transmission of external shocks to Portugal. Building on the framework developed by Berg et al (2006), this model differentiates between shocks originating from both inside and outside the euro area, as well as domestic shocks, each of which have different implications for Portugal. This framework is also used to consider the dynamics of the Portuguese economy over recent decades. The model, which is designed to guide forecasts and undertake simulations, can easily be modified for use in other small euro area countries.

Keywords: WP; demand shock; Portugal; euro area; macroeconomic modeling; Bayesian estimation; output gap dynamics; price level; transmission mechanism; inflation dynamics; inflation shock; reaction function; interest rate gap; accommodative monetary policy stance; higher-than-trend inflation; inflation expectation; Output gap; Exchange rates; Inflation; Real exchange rates; Real interest rates; Global (search for similar items in EconPapers)
Pages: 20
Date: 2019-12-20
New Economics Papers: this item is included in nep-mac and nep-opm
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Citations: View citations in EconPapers (4)

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