Business Cycle and Monetary Policy Analysis in a Structural Sticky- Price Model of The Euro Area

Miguel Casares

No 109, Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra from Departamento de Economía - Universidad Pública de Navarra

Abstract: Structural models are a powerful tool for business cycle and monetary policy analysis because they are assumed to be invariant to either policy changes or external shoxks. In this paper, we derive a neoclassical monetary model in which both the demand and supply side are setructural in the sense that the behavioral equations obtaind are regorously calculated from optimizing decisions of the individuals. Moerover, we introduce price stickiness on the supply side decisions so as to have relevant short-run real effects of monetary policy through the rreal interest rate channel. The resulting medium-size model will be calibrated and estimated for the euro area economies. As two examples of the applications of the model for the euro area, some simulations on business cycle and monetary policy analysis will be carried out.

Keywords: optimizing dynamic models; sticky prices; business cycle; Taylor rules (search for similar items in EconPapers)
JEL-codes: E20 E32 E52 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2001
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (15)

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Working Paper: Business cycle and monetary policy analysis in a structural sticky-price model of the euro area (2001)
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