A Medium‐Scale New Keynesian Open Economy Model of Australia

Jarkko P. Jääskelä and Kristoffer Nimark ()

The Economic Record, 2011, vol. 87, issue 276, 11-36

Abstract: We estimate a new Keynesian open economy dynamic stochastic general equilibrium model of Australia with a large number of shocks, frictions and rigidities, matching a large number of observable time series. We find that both foreign and domestic shocks are important drivers of the Australian business cycle. We also find that the initial impact on inflation of an increase in demand for Australian commodities is negative, because of an improvement in the real exchange rate, although there is a persistent positive effect on inflation that dominates at longer horizons.

Keywords: C11; E40; E52 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (27)

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http://hdl.handle.net/10.1111/j.1475-4932.2010.00688.x

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Working Paper: A Medium-Scale New Keynesian Open Economy Model of Australia (2015)
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