IMF Working Papers

A Three-Country Macroeconomic Model for Portugal

By Alex Pienkowski

December 20, 2019

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Alex Pienkowski. A Three-Country Macroeconomic Model for Portugal, (USA: International Monetary Fund, 2019) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper outlines a simple three-country macroeconomic model designed to focus on the transmission of external shocks to Portugal. Building on the framework developed by Berg et al (2006), this model differentiates between shocks originating from both inside and outside the euro area, as well as domestic shocks, each of which have different implications for Portugal. This framework is also used to consider the dynamics of the Portuguese economy over recent decades. The model, which is designed to guide forecasts and undertake simulations, can easily be modified for use in other small euro area countries.

Subject: Exchange rates, Financial services, Foreign exchange, Inflation, Output gap, Prices, Production, Real exchange rates, Real interest rates

Keywords: Accommodative monetary policy stance, Bayesian estimation, Demand shock, Euro area, Exchange rates, Global, Higher-than-trend inflation, Inflation, Inflation dynamics, Inflation expectation, Inflation shock, Interest rate gap, Macroeconomic modeling, Output gap, Output gap dynamics, Portugal, Price level, Reaction function, Real exchange rates, Real interest rates, Transmission mechanism, WP

Publication Details

  • Pages:

    20

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2019/281

  • Stock No:

    WPIEA2019281

  • ISBN:

    9781513519241

  • ISSN:

    1018-5941