Multiple constraints applied into the DSGE model: The case of unconventional monetary easing in the Czech economy
| Autoři | |
|---|---|
| Rok publikování | 2016 |
| Druh | Článek ve sborníku |
| Konference | Proceedings of the International Scientific Conference QUANTITATIVE METHODS IN ECONOMICS Multiple Criteria Decision Making XVIII. Vrátna, Slovakia, 2016 |
| Fakulta / Pracoviště MU | |
| Citace | |
| Obor | Ekonomie |
| Klíčová slova | Zero Lowe Bound; unconventional monetary policy; constraints in DSGE models |
| Popis | In this paper, we deal with the nonlinear constraints applied into the standard small open economy DSGE model. As a real economy example, we study a case of the zero lower bound on the interest rate and the lower bound on the foreign exchange rate. We analyze the simulated trajectories of the model variables that represent the economy during a period of low interest rates that reach the zero lower bound. The second constraint represents the usage of the foreign exchange rate as an unconventional tool for monetary easing. The tool used for our analysis is called DynareOBC and it was developed by Tom Holden. Its basic principle is based on the quadratic optimization. The toolbox is an extension of well-known toolbox Dynare and it is suitable for using under computational system Matlab. The results suggest that the foreign exchange rate may substitute the interest rate as a monetary tool when necessary. |
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