Author(s): Marco Ratto, Werner Röger, Jan in’t Veld and Riccardo Girardi (Directorate General for Economic and Financial Affairs)
In recent years a new consensus has emerged in macroeconomics in general and in model building in particular, the so called New Keynesian Paradigm (NKM).
This paper applies Bayesian estimation techniques to a time series data set of the euro area and presents estimates of a DSGE model. The purpose of this paper is not to estimate the current version of the QUEST model directly with these methods but rather to estimate a prototype new generation New-Keynesian DSGE model. This model can then serve as a benchmark for an estimation of a QUEST specification. In fact in some dimensions the QUEST model may need to be adjusted to come closer to a DSGE model.
|ISBN 92-894-8119-6 (online)|
|ISSN 1725-3187 (online)|