Sunday, September 5, 2010

Got a New Idea for Monetary Policy?

Do you have a new proposal for monetary policy? Perhaps a new policy rule? If so, it would be good to try out your idea first on a model of the economy. See how it works. Better yet, since economic models are different and economists frequently disagree, try it out in several models to be sure your rule is robust. But what models and how ?

Volker Wieland and his colleagues at Goethe University of Frankfurt are performing a valuable public service that makes it much easier to try out new policy ideas than it used to be when work on policy rules was first starting. They are creating an on-line model database containing monetary models used at the Fed, the ECB, and other central banks, including the Swedish Riksbank and the Central Bank of Chile, as well as the IMF and academia.

The models range in size from over 100 equation models to small three equation models (a policy rule equation for the interest rate, a staggered price setting equation for inflation, and an equation relating output to the interest rate). They all have inflexibilities, forward-looking expectations, and a policy analysis based on policy rules. So far there are 35 models in the database. Here is a list. For more information log into Volker Wieland's model database and have some fun.

Models in the Database

1. Small Calibrated Models
1.1 Rotemberg, Woodford (1997)
1.2 Levin, Wieland, Williams (2003)
1.3 Clarida, Gali, Gertler (1999)
1.4 Clarida, Gali, Gertler 2-Country (2002)
1.5 McCallum, Nelson (1999)
1.6 Ireland (2004)
1.7 Bernanke, Gertler, Gilchrist (1999)
1.8 Gali, Monacelli (2005)
2. Estimated US Models
2.1 Fuhrer, Moore (1995)
2.2 Orphanides, Wieland (1998)
2.3 FRB-US model linearized as in Levin, Wieland, Williams (2003)
2.4 FRB-US model 08 linearized by Brayton and Laubach (2008)
2.5 FRB-US model 08 mixed expectations, linearized by Laubach (2008)
2.6 Smets, Wouters (2007)
2.7 CEE/ACEL Altig, Christiano, Eichenbaum, Linde (2004)
2.8 New Fed US Model by Edge, Kiley, Laforte (2007)
2.9 Rudebusch, Svensson (1999)
2.10 Orphanides (2003b)
2.11 IMF projection model by Carabenciov et al. (2008)
2.12 De Graeve (2008)
2.13 Christensen, Dib (2008)
2.14 Iacoviello (2005)
3. Estimated Euro Area Models
3.1 Coenen, Wieland (2005) (ta: Taylor-staggered contracts)
3.2 Coenen, Wieland (2005) (fm: Fuhrer-Moore staggered contracts)
3.3 ECB Area Wide model linearized as in Dieppe et al. (2005)
3.4 Smets, Wouters (2003)
3.5. Euro Area Model of Sveriges Riksbank (Adolfson et al. 2007)
3.6. Euro Area Model of the DG-ECFIN EU (Ratto et al. 2009)
3.7. ECB New-Area Wide Model of Coenen, McAdam, Straub (2008)
4. Estimated Small Open-Economy Models (other countries)
4.1. RAMSES Model of Sveriges Riskbank, Adolfson et al.(2008b)
4.2 Model of the Chilean economy by Medina, Soto (2007)
5. Estimated/Calibrated Multi-Country Models
5.1 Taylor (1993a) model of G7 economies
5.2 Coenen,Wieland (2002, 2003) G3 economies
5.3 IMF model of euro area & CZrep by Laxton, Pesenti (2003)
5.4 FRB-SIGMA model by Erceg, Gust, Guerrieri (2008)

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