Estimated DSGE Model for Monetary and Fiscal Polic Coordination Analysis – The Case of Serbia
Jan 23, 2018
About this article
Published Online: Jan 23, 2018
Page range: 145 - 173
Received: Jun 14, 2017
Accepted: Jul 07, 2017
DOI: https://doi.org/10.2478/jcbtp-2018-0007
Keywords
© Central Bank of Montenegro
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We present a new-Keynesian model for small open economy, with price rigidities stemming from a Calvo pricing scheme (1983), monopolistic banking system, financial dollarization of the economy and monetary and fiscal policy governed by rules. We estimate the model on Serbian data and propose various model extensions that could be used for monetary and fiscal policy analysis. We consider 6 combinations of monetary and fiscal policy regimes, inflation targeting and currency peg on one hand, and discretionary cyclically neutral fiscal policy and fiscal rules, on the other. The model with inflation targeting and discretionary fiscal policy fits the data best.