Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322271 
Year of Publication: 
2012
Citation: 
[Journal:] Journal of Macroeconomics [ISSN:] 1873-152X [Volume:] 34 [Issue:] 1 [Publisher:] Elsevier [Place:] Amsterdam [Year:] 2012 [Pages:] 95-111
Publisher: 
Elsevier, Amsterdam
Abstract: 
We present and test a model of the Eurozone, with a special emphasis on the role of risk aversion and money. The model follows the New Keynesian DSGE framework, money being introduced in the utility function with a non-separability assumption. Money is also introduced in the Taylor rule. By using Bayesian estimation techniques, we shed light on the determinants of output, inflation, money, interest rate, flexible-price output, and flexible-price real money balance dynamics. The role of money is investigated further. Its impact on output depends on the degree of risk aversion. Money plays a minor role in the estimated model. Yet, a higher level of risk aversion would imply that money had significant quantitative effects on business cycle fluctuations.
Subjects: 
Euro area
Money demand
Risk attitude
Bayesian estimation
DSGE Model
Role of Money
Money supply
JEL: 
E31
E51
E58
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)
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