Incorporating adaptive learning into an open-economy DSGE model, we examine how monetary policy rules should adjust when agents’ information set deviates from that assumed under the rational expectations paradigm. We find that when agents observe current shocks but don’t know the parameters...

Despite sound theoretical foundations a drawback of the New Keynesian model is its inability to generate adequate persistence in the variables it seeks to explain. A common solution is to modify the model to include lagged variables. However, this is unsatisfactory as many such modifications...

To develop forecasting procedures with a forward-looking dynamic general equilibrium model, we built a small New-Keynesian model and calibrated it to euro area data. It was essential in this context that we allowed for long-run growth in GDP. We brought additional asset price equations based on...

Over the past two years, the IMF staff has been developing a new multicountry macroeconomic model called the Global Economy Model (GEM). This paper explains why such a model is needed, how GEM differs from its predecessor model, and how the new features of the model can improve the IMF’s...

We examine whether the "fear" of globalisation can be rationalised by economic theory. To do so, we depart from the standard AD/AS (partial) equilibrium model where the coordinational role of the Auctioneer is substituted by an implementation device based on learning (Guesnerie, 1992). By...

Building on recent work on the role of speculation and inventories in oil markets, we embed a competitive oil storage model within a DSGE model of the U.S. economy. This enables us to formally analyze the impact of a (speculative) storage demand shock and to assess how the effects of various...