Understanding the behaviour of private consumption is crucial for the assessment of the economic situation in the short and the medium term. As the largest expenditure component of GDP, household spending plays a central role in the cyclical fluctuations of activity around its long-term growth...

This paper develops a DSGE model for an open economy and estimates it on euro area data using Bayesian estimation techniques. The model features nominal and real frictions, as well as financial frictions in the form of liquidity constrained households. The model incorporates active monetary and...

It is often argued that fiscal stabilisation in the euro area compares unfavourably with the US, not least because of the perceived limitations of the Stability and Growth Pact. This paper qualifies this perception by taking a closer look at fiscal policy making since the mid-1990s. It examines...

This paper uses an estimated DSGE model for the euro area to study the effects of fiscal stabilisation policies. There are at least two features of the euro area economy which makes this analysis interesting. First, there are nominal rigidities in goods and labour markets, and there are...

This paper examines the benefits of co-ordination in EMU in a stylised manner and how these benefits have shaped the co-ordination framework in EMU. It then discusses in detail the co-ordination experience in four areas that are particularly important for the functioning of EMU: (i) fiscal...

In recent years a new consensus has emerged in macroeconomics in general and in model building in particular, the so called New Keynesian Paradigm (NKM).This paper applies Bayesian estimation techniques to a time series data set of the euro area and presents estimates of a DSGE model. The...

This paper considers the potential impact of a shift in official foreign reserves from dollars to euros using a global DSGE model. This paper uses QUEST III, a multi-region global DSGE model, to study the macroeconomic effects of a gradual equalization of official foreign reserves between...

Most OECD countries have experienced a sharp reduction in the volatility of output and inflation over the past three decades. Although this Great Moderation process has stirred considerable interest in economic and policy circles, research on its causes has so far tended to focus on the US...

This paper introduces a statistical model for short-term GDP forecasting based on approximate dynamic factors, Stock and Watson methodology, extracted from a very large number of leading indicators at several lags. Given that factor extraction is performed on many series from all countries of...

The study on price stickiness examined nominal rigidities in the euro area and their importance for the functioning of markets. The study examined nominal rigidities in the euro area and their importance for the functioning of markets. It analysed the price setting behaviour of firms at the...