2009-07-27
Working Paper 173
Nicolas Groshenny
Evaluating a monetary business cycle model with unemployment for the euro area
This paper estimates a medium-scale DSGE model with search unemployment by matching model and data spectra. Price mark-up shocks emerge as the main source of business-cycle fluctuations in the euro area. Key factors in the propagation of these disturbances are a high degree of inflation indexation and a persistent response of monetary policy to deviations from the inflation target.
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