Natural rate measures in an estimated DSGE model of the U.S. economy

By Rochelle M. Edge, Michael T. Kiley, Jean-Philippe Laforte. 2008

177 citations recorded by the source corpus.

This paper presents a monetary DSGE model of the U.S. economy. The model captures the most important production, expenditure, and nominal-contracting decisions underlying economic data while remaining sufficiently small to allow it to provide a clear interpretation of the data. We emphasize the role of model-based analyses as vehicles for storytelling by providing several examples - based around the evolution of natural rates of production and interest - of how our model can provide narratives to explain recent macroeconomic fluctuations. The stories obtained from our model are both similar to and quite different from conventional accounts.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7268d9545bc78379d77b21e01954e6fa21975c2c

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In Economics and Econometrics

Citations in the corpus

Policy Analysis Using DSGE Models: An Introduction (2010, background): “Dynamic stochastic general equilibrium models used for policy analysis share a fairly simple structure, built around three interrelated blocks: a demand block, a supply block, and a 4 Some of these larger DSGE models inform policy analysis at central banks around the world: Smets and Wouters (2007) ”
Monetary Policy in a Low Interest Rate World (2017, unknown): “Earlier contributions, such as Edge, Kiley, and Laforte (2008), focused on the period after the early 1980s and before the Great Recession, yielding models that predict relatively modest cyclical fluctuations—a potential problem we earlier identified with contributions to the ELB debate, such as…”
Resuscitating the Wage Channel in Models with Unemployment Fluctuations (2008, unknown): “models in use at central banks, see for example Smets and Wouters (2005) and Edge, Kiley, and Laforte (2007) .6 Labor goods are sold to a wholesale sector in a perfectly competitive”
A new comparative approach to macroeconomic modeling and policy analysis (2012, methodology): “The US_NFED08 is a version of the medium-scale closed economy model as in Edge et al. (2008) used for estimation in Wieland and Wolters (2011). In this model, specifications regarding production and expenditures are motivated by the long-run and cyclical properties observed in the U.S. data. Product”
Forward Guidance and Macroeconomic Outcomes since the Financial Crisis (2016, background): “Krugman (1998) and Eggertsson and Woodford (2003) implicitly assume that monetary policymakers can manipulate private- sector expectations to be consistent with any rational expectations equilibrium.”