In 2007 all ECB publications feature a motif taken from the €20 banknote. This paper can be downloaded without charge from

Abstract not found

This paper reviews Bayesian methods that have been developed in recent years to estimate and evaluate dynamic stochastic general equilibrium (DSGE) models. We consider the estimation of linearized DSGE models, the evaluation of models based on Bayesian model checking, posterior odds comparisons, and comparisons to vector autoregressions, as well as the nonlinear estimation based on a second-order accurate model solution. These methods are applied to data generated from correctly specified and misspecified linearized DSGE models, and a DSGE model that was solved with a second-order perturbation method. (JEL C11, C32, C51, C52)

The effecTS of MoneTary Policy on uneMPloyMenT dynaMicS under Model uncerTainTy

In 2004 all publications will carry a motif taken from the €100 banknote. This paper can be downloaded without charge from

Abstract not found

Abstract not found

In 2008 all ECB publications feature a motif taken from the 10 banknote. This paper can be downloaded without charge from

Towards a monetary policy evaluation framework by Stéphane Adjemian,

The popular Calvo model with indexation (Christiano, Eichenbaum and Evans (2005)) and sticky information (Mankiw and Reis (2002)) models have guided much of the monetary policy discussion. The strength of these approaches is that they can explain the persistence of inflation. However, both of these theories are inconsistent with the micro data on prices. In this paper, I evaluate the consequences of implementing policies that are optimal from the perspective of models that overlook the micro-data. To do so, I employ two models: the model proposed by Gali and Gertler (1999) and the Generalized Taylor Economy (GT E). These models can explain the persistence of inflation and are consistent with the micro-data. The findings reported in the paper suggest that policy conclusions are significantly affected by whether persistence arises in a manner consistent with the micro-data and illustrate the potential for conclusions from the models that ignore the micro-data to be misleading.