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A Medium-Scale DSGE Model for the Integrated Policy Framework

Author

Listed:
  • Tobias Adrian

    (International Monetary Fund)

  • Vitor Gaspar

    (International Monetary Fund)

  • Francis Vitek

    (International Monetary Fund)

Abstract

This paper jointly analyzes the optimal conduct of monetary policy, foreign exchange intervention, fiscal policy, macroprudential policy, and capital flow management. This policy analysis is based on an estimated medium-scale dynamic stochastic general equilibrium (DSGE) model of the world economy, featuring a range of nominal and real rigidities, extensive macrofinancial linkages with endogenous risk, and diverse spillover transmission channels. In the pursuit of inflation and output stabilization objectives, it is optimal to adjust all policies in response to global financial cycle upturns and downturns when feasible—including foreign exchange intervention and capital flow management under some conditions—to widely varying degrees depending on the structural characteristics of the economy. The framework is applied empirically to four small open advanced and emerging market economies.

Suggested Citation

  • Tobias Adrian & Vitor Gaspar & Francis Vitek, 2024. "A Medium-Scale DSGE Model for the Integrated Policy Framework," International Journal of Central Banking, International Journal of Central Banking, vol. 20(4), pages 1-123, October.
    • Handle: RePEc:ijc:ijcjou:y:2024:q:4:a:1
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    References listed on IDEAS

    as
    1. Tobias Adrian & Vitor Gaspar & Francis Vitek, 2024. "A Medium-Scale DSGE Model for the Integrated Policy Framework," International Journal of Central Banking, International Journal of Central Banking, vol. 20(4), pages 1-123, October.
    2. Mr. Suman S Basu & Ms. Emine Boz & Ms. Gita Gopinath & Mr. Francisco Roch & Ms. Filiz D Unsal, 2020. "A Conceptual Model for the Integrated Policy Framework," IMF Working Papers 2020/121, International Monetary Fund.
    3. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
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    Cited by:

    1. Leonid Serkov & Sergey Krasnykh, 2023. "The Specific Behavior of Economic Agents with Heterogeneous Expectations in the New Keynesian Model with Rigid Prices and Wages," Mathematics, MDPI, vol. 11(4), pages 1-17, February.
    2. Tobias Adrian & Vitor Gaspar & Francis Vitek, 2024. "A Medium-Scale DSGE Model for the Integrated Policy Framework," International Journal of Central Banking, International Journal of Central Banking, vol. 20(4), pages 1-123, October.

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