BEMOD A DSGE Model for the Spanish Economy and the Rest of the Euro Area.pdf

javier andr s pablo burriel and ngel estrada bemod a dsge model for the spanish economy and the rest of the euro area 2006 documentos de trabajo n 0631 bemod a dsge model for the spanish economy and the rest of the euro area bemod a dsge model for the spanish economy and the rest of the euro area javier andr s banco de espa a and universidad de valencia pablo burriel banco de espa a ngel estrada oficina econ mica de presidencia del gobierno we are grateful to fabio canova juan francisco jimeno pilar l hotellerie david l pez salido elo sa ortega eva ortega juan ortega juan pe alosa fernando restoy and javier vall s for discussions and suggestions as well as seminar participants at the banco de espa a for helpful comments in addition we would like to thank alberto urtasun for helping with the calibration the views expressed here are those of the authors and do not necessarily reflect those of the banco de espa a correspondence address alcal 48 28014 madrid spain e mail address pburriel bde es documentos de trabajo n 0631 2006 the working paper series seeks to disseminate original research in economics and finance all papers have been anonymously refereed by publishing these papers the banco de espa a aims to contribute to economic analysis and in particular to knowledge of the spanish economy and its international environment the opinions and analyses in the working paper series are the responsibility of the authors and therefore do not necessarily coincide with those of the banco de espa a or the eurosystem the banco de espa a disseminates its main reports and most of its publications via the internet at the following website http www bde es reproduction for educational and non commercial purposes is permitted provided that the source is acknowledged banco de espa a madrid 2006 issn 0213 2710 print issn 1579 8666 on line dep sito legal m 50792 2006 imprenta del banco de espa a abstract in this paper we present the theoretical foundations and the simulation results obtained with a new dynamic general equilibrium model developed at the banco de espa a for the spanish economy and the rest of euro area the model is designed to help in simulating the effect of alternative shocks on the main aggregate variables the main contributions of this work from a theoretical perspective are the modelling of a monetary union composed of two regions the inclusion of housing as a durable good with its own sector of production and the degree and detail of the disaggregation considered for each country in the model which replicates the quarterly national accounts on the empirical side the main contribution is the detailed calibration of the most important ratios of the spanish and rest of the euro area economies keywords sdge model open economy simulation shocks macroeconomic policies jel codes e32 e50 f41 4 5 3 0 5 3 6 6 1 1 banco de espa a 10 documento de trabajo n 0631 7 6 hg1 9 4 hgg 9 banco