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LED: An estimated DSGE model of the Luxembourg economy for policy analysis

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  • Alban Moura

Abstract

This paper outlines a new estimated dynamic stochastic general equilibrium (DSGE) model of the Luxembourg economy named LED, for Luxembourg Estimated DSGE. The paper provides a thorough discussion of the model structure, explains how LED is solved and estimated, and shows how it can be used to study important properties of the Luxembourg economy. The empirical results are encouraging: parameter estimates take reasonable values, the model fits the data well, and its implications regarding the determinants of economic growth and cyclical fluctuations in Luxembourg are plausible.

Suggested Citation

  • Alban Moura, 2020. "LED: An estimated DSGE model of the Luxembourg economy for policy analysis," BCL working papers 147, Central Bank of Luxembourg.
    • Handle: RePEc:bcl:bclwop:bclwp147
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    File URL: https://www.bcl.lu/en/publications/Working-papers/147/BCLWP147.pdf
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    More about this item

    Keywords

    DSGE models; open-economy macroeconomics; Bayesian inference; policy analysis; Luxembourg.;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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