The Ifo DSGE Model for the German Economy

Nikolay Hristov

No 210, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: This paper estimates a medium-scale open economy DSGE model for Germany and the rest of the Euro Area (REA). The parameter estimates indicate that there is a modest degree of structural heterogeneity between Germany and the rest of the Euro Area. In particular, (i) the private sector in Germany tends to adjust its capital stock faster than its counterpart in the REA, (ii) the innovations to government spending as well as those to the degree of competition in goods markets are relatively more volatile in Germany and (iii) nominal prices and wages appear to be slightly more flexible in Germany than in the REA. A comparison based on marginal likelihoods shows that the DSGE model fits the observable macroeconomic time series similarly well as unrestricted Bayesian VARs (BVARs) estimated on the same data set.

JEL-codes: C11 C51 E17 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (17)

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