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Two orthogonal continents: testing a two-country DSGE model of the US and EU using indirect inference

Le, Vo Phuong Mai, Meenagh, David, Minford, Patrick and Wickens, Michael 2009. Two orthogonal continents: testing a two-country DSGE model of the US and EU using indirect inference. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

We examine a two country model of the EU and the US. Each has a small sector of the labour and product markets in which there is wage/price rigidity, but otherwise enjoys flexible wages and prices with a one quarter information lag. Using a VAR to represent the data, we find the model as a whole is rejected. However it is accepted for real variables, output and the real exchange rate, suggesting mis-specification lies in monetary relationships. The model highlights a lack of spillovers between the US and the EU.

Item Type: Monograph (Working Paper)
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
Publisher: Cardiff University
Date of First Compliant Deposit: 30 March 2016
Last Modified: 04 Jun 2017 08:25
URI: http://orca.cf.ac.uk/id/eprint/77816

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