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Working Paper Series no. 200: Supply Shocks and Optimal Monetary Policy in the Euro Zone (in French)

Abstract

This article assesses monetary policy's performances in the Euro zone in the face of supply shocks. We determine the responses of output, inflation, labor share and the nominal interest rate to a supply shock as identified through a structural VAR model. We then develop a DSGE model with nominal rigidities subject to the optimal monetary policy. The model is estimated and tested on the basis of its ability to reproduce the responses drawn from the VAR model. Our results suggest that assuming optimal monetary policy allows for a satisfying fit to the data.

Patrick Fève, Julien Matheron and Jean-Guillaume Sahuc
February 2008

Classification JEL : E31, E32, E52.

Keywords : Supply shocks, SVAR, Optimal Monetary Policy.

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Working Paper Series no. 200: Supply Shocks and Optimal Monetary Policy in the Euro Zone (in French)
  • Published on 02/01/2008
  • EN
  • PDF (638.88 KB)
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Updated on: 06/12/2018 10:58