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The Impacts of Monetary and Fiscal Policies in the USA: A Bayesian DSGE Approach

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  • Salim Ergene

    (University of Virginia)

Abstract

I estimate an open economy DSGE model by using Bayesian estimation technique. Monetary policy officials responded to shocks to inflation and output gap actively in the past, however they have weakly reacted to shocks to inflation and output gap over the last fifteen years. Additionally, fiscal policy officials have not focused on smoothing fiscal policies in recent years. Impulse response functions imply that smoothing policies in the past confronted severe macroeconomic volatilities. Though the estimated coefficients in the Philips curve imply that past inflation rate is also crucial for the current inflation rate, forward looking behaviour is still predominant and the data for each parameter is informative.

Suggested Citation

  • Salim Ergene, 2016. "The Impacts of Monetary and Fiscal Policies in the USA: A Bayesian DSGE Approach," Economics Bulletin, AccessEcon, vol. 36(3), pages 1388-1397.
    • Handle: RePEc:ebl:ecbull:eb-16-00024
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    monetary policy; fiscal policy; bayesian estimation;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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