Unusual Shocks in our Usual Models
Filippo Ferroni,
Jonas Fisher and
Leonardo Melosi
No 17830, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
We propose a method to allow usual business cycle models to account for the unusual COVID episode. The pandemic and the public and private responses to it are represented by a new shock called the Covid shock, which loads onto wedges that underlie the usual shocks and comes with news about its evolution. We apply our method to a standard medium-scale model, estimating the loadings with 2020q2 data and the evolving news using professional forecasts. It accounts for most of the early macroeconomic dynamics, was inflationary and a persistent drag on activity, and the majority of its effects were unanticipated. We also show how the Covid shock can be used estimate DSGE models with data before, during, and after the pandemic.
Date: 2023-01
References: Add references at CitEc
Citations:
Downloads: (external link)
https://cepr.org/publications/DP17830 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
Related works:
Journal Article: Unusual shocks in our usual models (2024) 
Working Paper: Usual Shocks in our Usual Models (2022) 
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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:17830
Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17830
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().