Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144308
Authors: 
Plasmans, Joseph
Michalak, Tomasz
Fornero, Jorge
Year of Publication: 
2006
Series/Report no.: 
Working Paper Research 94
Abstract: 
In this paper we derive a microfounded macro New Keynesian model for open economies, be them large or small. We consider habit formation in consumption, sectoral linkages, domestic and foreign governments, tradable and non-tradable final and intermediate goods and imperfect pass-through in these sectors. Sticky nominal prices and wages are modeled in a Calvo way. The model economy is composed of a continuum of infinitely-lived consumers and producers for three regions (countries). Numerical simulations and econometric estimations are presented with a focus on a small open economy member of the EMU. Welfare implications of the involved price and wage rigidities are discussed
Subjects: 
New Keynesian open economy model
tradable and non-tradable sectors
final and intermediate goods
monetary policy rules
numerical simulations
Bayesian estimation
welfare implications
JEL: 
E31
D21
F41
P24
Document Type: 
Working Paper

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