Actual and perceived monetary policy rules in a dynamic equilibrium model of the euro area

Mika Kortelainen

No 3/2001, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: We present a dynamic general equilibrium model with some nominal rigidities and calibrate it to euro area data.The most important features of the model include consumption/saving decisions according to Blanchard's stochastic lifetimes approach; valuation of private financial wealth according to the present value of capital income; overlapping Calvo wage contracts in the labour market; and a neoclassical supply side with Cobb-Douglas technology.The model is developed for use in analysing differences between perceived and actual monetary policy rules, which is then done as a means of evaluating the macroeconomic benefits of credibility in monetary policy.General properties of the model are analysed with a variety of simulation experiments.

Keywords: EDGE; rational expectation; DGE models; nominal rigidites (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2001_003

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