NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

Malin Adolfson, Stefan Laséen, Jesper Lindé, Lars E.O. Svensson

NBER Working Paper No. 14092
Issued in June 2008
NBER Program(s):   EFG   IFM   ME

We show how to construct optimal policy projections in Ramses, the Riksbank’s open-economy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports our view that the model parameters may be regarded as unaffected by the monetary policy specification. We discuss how monetary policy, and in particular the choice of output gap measure, affects the transmission of shocks. Finally, we use the model to assess the recent Great Recession in the world economy and how its impact on the economic development in Sweden depends on the conduct of monetary policy. This provides an illustration on how Rames incorporates large international spillover effects.

download in pdf format
   (510 K)

email paper

This paper is available as PDF (510 K) or via email.

This paper was revised on December 5, 2011

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14092

Published: Malin Adolfson & Stefan Laséen & Jesper Lindé & Lars E.O. Svensson, 2011. "Optimal Monetary Policy in an Operational Medium‐Sized DSGE Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(7), pages 1287-1331, October.

Users who downloaded this paper also downloaded these:
Christiano, Trabandt, and Walentin w16074 DSGE Models for Monetary Policy Analysis
Adolfson, Laseen, Linde, and Svensson w14510 Monetary Policy Trade-Offs in an Estimated Open-Economy DSGE Model
Svensson and Williams w13892 Optimal Monetary Policy under Uncertainty in DSGE Models: A Markov Jump-Linear-Quadratic Approach
Laseen and Svensson w14902 Anticipated Alternative Instrument-Rate Paths in Policy Simulations
van Binsbergen, Fernandez-Villaverde, Koijen, and Rubio-Ramírez w15890 The Term Structure of Interest Rates in a DSGE Model with Recursive Preferences
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us