DSGE Models for Monetary Policy Analysis
Monetary DSGE models are widely used because they fit the data well and they can be used to address important monetary policy questions. We provide a selective review of these developments. Policy analysis with DSGE models requires using data to assign numerical values to model parameters. The chapter describes and implements Bayesian moment matching and impulse response matching procedures for this purpose.
We are grateful for advice from Michael Woodford and for comments from Volker Wieland. We are grateful for assistance from Daisuke Ikeda and Matthias Kehrig. The views expressed in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the European Central Bank, or of Sveriges Riksbank, or of the National Bureau of Economic Research.
DSGE Models for Monetary Policy Analys is, joint with Mathia s Trabandt and Karl Walentin, in Benjamin M. Friedman, and Michael Woodford, editors: Handbook of Monetary Economics , Vol. 3A, The Netherlands: North-Holland.