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Simple Model for a Small Open Economy: An Application to the ASEAN-5 Countries

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  • Arief Ramayandi

    (Center for Economics and Development Studies Dept. of Economics, Padjadjaran University)

Abstract

This paper examines the suitability of a simple structural small open economy model in characterising the economic dynamics in five ASEAN economies. The model is a variant of a small open economy model with imperfect competition and nominal rigidities. It is then confronted to the data using maximum likelihood estimation. The structure of the underlying model is able to produce estimated parameters that largely capture the economic characteristics and dynamics of each of the economies in a plausible manner. It enables one to compare and contrast the behaviour of the five economies under consideration, particularly their monetary transmission mechanism. The estimation results are then used to revisit the structural shocks correlation issue in the region, and can also be used as the basis for constructing the relevant approximation for the aggregate welfare function for each of the economies.

Suggested Citation

  • Arief Ramayandi, 2008. "Simple Model for a Small Open Economy: An Application to the ASEAN-5 Countries," Working Papers in Economics and Development Studies (WoPEDS) 200801, Department of Economics, Padjadjaran University, revised May 2008.
    • Handle: RePEc:unp:wpaper:200801
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    File URL: http://ceds.feb.unpad.ac.id/wopeds/200801.pdf
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    Cited by:

    1. Arief Ramayandi, 2009. "Assessing Monetary Policy Efficiency in the ASEAN-5 Countries," Working Papers in Economics and Development Studies (WoPEDS) 200902, Department of Economics, Padjadjaran University, revised Mar 2009.
    2. Dutu, Richard, 2016. "Why has economic growth slowed down in Indonesia? An investigation into the Indonesian business cycle using an estimated DSGE model," Journal of Asian Economics, Elsevier, vol. 45(C), pages 46-55.
    3. Kindy R. Sjahrir, 2018. "Dynamic Stochastic General Equilibrium With Financial Accelerator: The Case Of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 201806, Department of Economics, Padjadjaran University, revised Dec 2018.

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    More about this item

    Keywords

    ASEAN; small open economy model; maximum likelihood estimation;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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