In this paper, we try to illustrate the interest of the Bayesian approach for the evaluation of economic policies, often realised by analysing the response of the economy to a standard shock. We present a Stochastic Dynamic General Equilibrium model for the euro area. The Bayesian estimation gives a measure of the uncertainty on the parameters, from which we can derive the uncertainty of the responses to standard shocks. As an illustration, we simulate the effects of a fiscal shock (announced VAT increase).
Stéphane Adjemian, Christophe Cahn, Antoine Devulder and Nicolas Maggiar
Classification JEL : E4, E5
Keywords : DSGE, euro zone, nominal rigidities, bayesian estimation.
Updated on: 06/12/2018 11:00