TY  - JOUR
AU  - Adolfson,Malin
AU  - Laséen,Stefan
AU  - Lindé,Jesper
AU  - Svensson,Lars E.O.
TI  - Monetary Policy Trade-Offs in an Estimated Open-Economy DSGE Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14510
PY  - 2008
Y2  - November 2008
UR  - http://www.nber.org/papers/w14510
L1  - http://www.nber.org/papers/w14510.pdf
N1  - Author contact info:
Malin Adolfson
Sveriges Riksbank
SE-103 37 Stockholm
Sweden
Tel: 46-8-787-04-96
Fax: 46-8-21-0531
E-Mail: malin.adolfson@riksbank.se

Stefan Laseen
Sveriges Riksbank
SE-103 37 Stockholm
Sweden
E-Mail: stefan.laseen@riksbank.se

Jesper Linde
International Finance
Mail Stop 20
Federal Reserve Board
20th and C streets, NW
Washington, D.C. 20551
E-Mail: Jesper.L.Linde@frb.gov

Lars E.O. Svensson
Sveriges Riksbank
SE-103 37 Stockholm
SWEDEN
Tel: +46 8 787 0107
Fax: +46 8 21 0531
E-Mail: lars.svensson@iies.su.se
AB  - This paper studies the transmission of shocks and the trade-offs between stabilizing CPI inflation and alternative measures of the output gap in Ramses, the Riksbank's empirical dynamic stochastic general equilibrium (DSGE) model of a small open economy. The main results are, first, that the transmission of shocks depends substantially on the conduct of monetary policy, and second, that the trade-off between stabilizing CPI inflation and the output gap strongly depends on which concept of potential output in the output gap between output and potential output is used in the loss function. If potential output is defined as a smooth trend this trade-off is much more pronounced compared to the case when potential output is defined as the output level that would prevail if prices and wages were flexible.
ER  -