## IMF Staff Papers, Volume 55, No. 2

_IMF Staff Papers, June 18, 2008_

## Source details

**Canonical URL:** [IMF Staff Papers, Volume 55, No. 2](https://www.imf.org/en/publications/imf-staff-papers/issues/2016/12/31/imf-staff-papers-volume-55-no-21719)

## Other formats

- [Markdown version](/en/publications/imf-staff-papers/issues/2016/12/31/imf-staff-papers-volume-55-no-21719/index.md)
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## Bibliographic details
- Published: June 18, 2008
- Series: IMF Staff Papers
- Volume: 55
- DOI: https://doi.org/10.5089/9781589067233.024

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### Overview and scope
- Special issue devoted to the Global Economy Model (GEM), a dynamic stochastic general equilibrium model.
- GEM is described as widely used by the IMF and central banks worldwide to study issues not adequately addressed with reduced-form econometric models or earlier macromodels whose dynamic equations lacked strong choice-theoretic foundations.
- Composition of the issue:
  - Douglas Laxton discusses the GEM philosophy and explains how modelers find solutions to systems of nonlinear equations.
  - Paolo Pesenti lays out the structure of the model in detail, explaining derivation of GEM equations from individual and firm-level self-interested maximizing behavior and interaction of individual decisions with government policy rules.
  - Six remaining papers present specific applications of the GEM structure to a variety of real problems and policy issues.

### Key thematic findings and model features
- Model class and purpose:
  - Dynamic stochastic general equilibrium framework (GEM).
  - Emphasizes choice-theoretic foundations for dynamic equations.
- Solution approach:
  - Focus on solving systems of nonlinear equations (as discussed by Douglas Laxton).
- Microfoundations:
  - Equations are derived from individual and firm-level self-interested maximizing behavior (as presented by Paolo Pesenti).
- Policy interaction:
  - Individual decisions interact with government policy rules within the GEM structure.
- Applications:
  - Six applied papers use GEM to study a variety of real problems and policy issues (topics not enumerated beyond this description in the source).

### Subjects and keywords
- Subject areas listed:
  - Consumption, Energy prices, Inflation, Labor, National accounts, Oil prices, Prices
- Keywords included:
  - adjustment cost, Asia and Pacific, Central and Eastern Europe, Consumption, energy price, Energy prices, Europe, Global, Inflation, NM economy, nominal interest rate, oil price, Oil prices, oil-importing region, PLPT, SP

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_Source: https://www.imf.org/en/publications/imf-staff-papers/issues/2016/12/31/imf-staff-papers-volume-55-no-21719_