MUSE: Monetary Union and Slovak Economy model

Matus Senaj, Milan Vyskrabka () and Juraj Zeman
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Milan Vyskrabka: National Bank of Slovakia, Monetary Policy Department

No WP 1/2010, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: In this paper, the Bayesian method together with the calibration approach is used to parameterise the DSGE model. We present a medium-scale two-country model. Parameters controlling the steady state of the model are calibrated in order to match the ratios of a few selected variables to their empirical counterparts. The remaining parameters are estimated via Bayesian method. Since Slovakia has been a euro area member country for only two years, the model allows switching from an autonomous monetary policy regime to a monetary union regime. This feature enables us to parameterise the model in the case of independent monetary policy and consequently to simulate the impacts of various structural shocks on the Slovak economy as a part of the monetary union. At the end of the paper, we present the impulse-response functions of the model to selected structural shocks.

Keywords: two-country model; Bayesian methods (search for similar items in EconPapers)
JEL-codes: C11 C51 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010-12
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1010

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