Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121018
Authors: 
Breuss, Fritz
Rabitsch, Katrin
Year of Publication: 
2008
Series/Report no.: 
FIW Working Paper 17
Abstract: 
We present a two-country New Open Economy Macro model of the Austrian economy within the European Union's Economic & Monetary Union (EMU). The model includes both nominal and real frictions that have proven to be important in matching business cycle facts, and that allows for an investigation of the effects and cross-country transmission of a number of structural shocks: shocks to technologies, shocks to preferences, cost-push type shocks and policy shocks. The model is estimated using Bayesian methods on quarterly data covering the period of 1976:Q1-2005:Q1. In addition to the assessment of the relative importance of various shocks, the model also allows to investigate effects of the monetary regime switch with the final stage of the EMU and investigates in how far this has altered macroeconomic transmission. We find that Austria's economy appears to react stronger to demand shocks, while in the rest of the Euro Area supply shocks have a stronger impact. Comparing the estimations on pre-EMU and EMU subsamples we find that the contribution of (rest of the) Euro Area shocks to Austria's business cycle fluctuations has increased significantly.
Subjects: 
EMU
DSGE Modelling
Bayesian Estimation
JEL: 
E4
E5
F4
Document Type: 
Working Paper

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