Money in a DSGE framework with an application to the Euro Zone

Abstract : In the current New Keynesian literature, the role of monetary aggregates is generally neglected. Yet it's hard to imagine money completely “passive” to the rest of the system. By entering real money balances in a non-separable utility function, we introduce an explicit role for money via preference redefinition in a simple New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. It involves new inflation and output gap specifications where money plays a significant role. We use the General Method of Moments (GMM) to calibrate our DSGE model of the Euro area and we show that the European Central Bank –ECB) should react more strongly to economic shocks as far as the role of money is found significant.
Document type :
Other publications
Complete list of metadatas

Cited literature [37 references]  Display  Hide  Download

https://hal-essec.archives-ouvertes.fr/hal-00553495
Contributor : Anne Crepin <>
Submitted on : Friday, January 7, 2011 - 2:34:42 PM
Last modification on : Thursday, February 3, 2011 - 9:53:26 AM
Long-term archiving on : Saturday, December 3, 2016 - 1:15:35 AM

File

09005_FourA_ans.pdf
Publisher files allowed on an open archive

Identifiers

  • HAL Id : hal-00553495, version 1

Collections

Citation

André Fourçans, Jonathan Benchimol. Money in a DSGE framework with an application to the Euro Zone. 2009. ⟨hal-00553495⟩

Share

Metrics

Record views

491

Files downloads

400