Behavior of Slovak Economy Integrated into EMU: DSGE Model with a Government Sector and Inflation Targeting

Authors

PISCA Vratislav VAŠÍČEK Osvald

Year of publication 2014
Type Article in Proceedings
Conference Proceedings of the International Scientific Conference QUANTITATIVE METHODS IN ECONOMICS Multiple Criteria Decision Making XVII
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web http://www.fhi.sk/files/katedry/kove/ssov/VKOXVII/Zbornik2014.pdf
Field Economy
Keywords nonlinear DSGE model; Slovak economy; monetary union; inflation targeting; fiscal policy; structural changes
Description In the paper we compare the behaviour and structure of Slovak economy in two periods: before and after the accession to the Eurozone. This small open economy is represented by two alternative specifications of medium scale nonlinear dynamic stochastic model of a general equilibrium with fiscal and monetary policy. In the period before accession to the Eurozone, domestic economy has its own monetary policy and after accession it is controlled by monetary policy of ECB. The models are estimated with the use of bayesian techniques. This approach leads to analysis of behaviour of Slovak economy and to the identification of the structural changes linked to the adoption of the Euro and European monetary policy, which seems to be one of the reasons of faster recovery of Slovak economy from recession to the balanced growth path than in the rest of the central European countries.
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