QUEST macroeconomic model

QUEST is the global macroeconomic model that the Directorate General for Economic and Financial Affairs (DG ECFIN) uses for macroeconomic policy analysis and research. It is a structural macro-model in the New-Keynesian tradition with rigorous microeconomic foundations derived from utility and profit optimisation and including frictions in goods, labour and financial markets.

There are different versions of the QUEST model, estimated and calibrated, each used for specific purposes. Model variants have been estimated using Bayesian methods, jointly with colleagues at the Commission's Joint Research Centre (JRC). These dynamic stochastic general equilibrium (DSGE) models are used for shock analyses and shock decompositions, for example to assess the main drivers of growth and imbalances.

Larger multi-country calibrated model versions are used to address issues for which a deeper level of disaggregation is required, both at the regional and sector level. Many of the main applications deal with fiscal and monetary policy interactions and either use a one-sector model or models that explicitly distinguish tradable and non-tradable sectors.

Other model variants also include housing and collateral constraints, and a banking sector. All calibrated model versions are employed using different country disaggregations, focussing on the euro area or EU as a whole, and other global regions, or on individual member states.

For the analysis of structural reforms an extended version of the QUEST model is used. This model captures both investment in tangibles and intangibles, and disaggregates employment into three skill categories. In this model variant technological change is semi-endogenous. This model is used to analyse the impact of structural reforms in the EU.

QUEST bibliography