Investigating structural differences of the Czech economy: Does asymmetry of shocks matter?
| Authors | |
|---|---|
| Year of publication | 2010 |
| Type | Article in Proceedings |
| Conference | Mathematical Methods in Economics 2010 |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | DSGE model dvou ekonomik; strukturální odlišnosti; asymetrické šoky |
| Attached files | |
| Description | The goal of this paper is to evaluate heterogeneity between the Czech Republic and the Euro area. For this purpose, we introduce a two-country dynamic stochastic general equilibrium model that allows different sources of heterogeneity across countries. We focus on differences in structural parameters and asymmetry of shocks hitting the two economies. Using Bayesian techniques, we estimate various specifications of log-linear models (unrestricted and nested) and then we test different sources of heterogeneity. Our results indicate that the main sources of heterogeneity are price and wage rigidities and the asymmetry of shocks. On the other hand, we have found strong evidence in favor of homogeneity in parameters describing utility function of households. |