Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153094
Authors: 
Angelini, Elena
D’Agostino, Antonello
McAdam, Peter
Year of Publication: 
2006
Series/Report no.: 
ECB Working Paper 660
Abstract: 
This paper documents the structure, estimation and simulation properties of the Italian block of the ESCB-multi-country model (MCM). The model is used regularly as an input into Eurosystem projection exercises and, to a lesser extent, in simulation analysis. The specification of the Italian model follows closely that of the Area-Wide Model (AWM) and indeed the other MCM country blocks (in terms of specification and accounting framework). The MCM is a quarterly estimated structural macroeconomic model that treats the economy in a relatively closed manner. It has a long-run classical equilibrium with a vertical Phillips curve but with some short-run frictions in price/wage setting and factor demands. Consequently, activity is demand-determined in the short-run but supply-determined in the longer run with employment having converged to a level consistent with an exogenously given level of equilibrium unemployment. The precise properties of the model are illustrated using a number of standard variant simulations.
Subjects: 
Italy
Macro-econometric Modelling
JEL: 
C3
C5
E1
E2
Document Type: 
Working Paper

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