An Estimated Dynamic Stochastic General Equilibrium Model of the Jordanian Economy

 
Author/Editor: Beidas-Strom, Samya ; Poghosyan, Tigran
 
Publication Date: February 01, 2011
 
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Summary: This paper presents and estimates a small open economy dynamic stochastic general-equilibrium model (DSGE) for the Jordanian economy. The model features nominal and real rigidities, imperfect competition and habit formation in the consumer’s utility function. Oil imports are explicitly modeled in the consumption basket and domestic production. Bayesian estimation methods are employed on quarterly Jordanian data. The model’s properties are described by impulse response analysis of identified structural shocks pertinent to the economy. These properties assess the effectiveness of the pegged exchange rate regime in minimizing inflation and output trade-offs. The estimates of the structural parameters fall within plausible ranges, and simulation results suggest that while the peg amplifies output, consumption and (price and wage) inflation volatility, it offers a relatively low risk premium.
 
Series: Working Paper No. 11/28
Subject(s): Income | Monetary policy | Exchange rate depreciation | Exchange rate appreciation | Economic models | External shocks | Demand | Oil prices | Price adjustments | Wage policy | Consumption | Jordan

Author's Keyword(s): DSGE | Bayesian Estimation | Jordan | Monetary and Exchange Rate Policy
 
English
Publication Date: February 01, 2011
Format: Paper
Stock No: WPIEA2011028 Pages: 51
Price:
US$18.00 (Academic Rate:
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