What Drives Business Cycles in a Small Open Economy with a Fixed Exchange Rate?

Arbeitspapier

We decompose the Danish business cycle into ten structural shocks using an open-economy DSGE model with infrequent determination of prices and wages which we estimate with Bayesian techniques. Consistent with the Danish monetary policy regime, we formulate an imperfect peg on the foreign exchange rate and analyse the resulting monetary transmission mechanism. We find that the Danish business cycle is dominated by stochastic movements in the labour supply in the long term, while demand shocks play a major role in the short term. Remarkably, the role of technology is negligible, and foreign factors only contribute little to the Danish business cycle, especially in the long term. With respect to the estimation, we generally find believable estimates although the degree of price stickiness is remarkably high.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: EPRU Working Paper Series ; No. 2005-02

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: open economy ; peg ; business cycles ; Bayesian estimation ; Konjunktur ; Offene Volkswirtschaft ; Fester Wechselkurs ; Bayes-Statistik ; Konjunkturzusammenhang ; Geldpolitik ; Schätzung ; Dänemark

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Dam, Niels Arne ; Gregers Linaa, Jesper
• Ereignis: Veröffentlichung
• (wer): University of Copenhagen, Economic Policy Research Unit (EPRU)
• (wo): Copenhagen
• (wann): 2005

Weitere Informationen

• Handle: http://hdl.handle.net/10419/82072
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ