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SERIEs

, Volume 1, Issue 1–2, pp 175–243 | Cite as

MEDEA: a DSGE model for the Spanish economy

  • Pablo Burriel
  • Jesús Fernández-Villaverde
  • Juan F. Rubio-Ramírez
Open Access
Original Article

Abstract

In this paper, we provide a brief introduction to a new macroeconometric model of the Spanish economy named MEDEA (Modelo de Equilibrio Dinámico de la Economía EspañolA). MEDEA is a dynamic stochastic general equilibrium (DSGE) model that aims to describe the main features of the Spanish economy for policy analysis, counterfactual exercises, and forecasting. MEDEA is built in the tradition of New Keynesian models with real and nominal rigidities, but it also incorporates aspects such as a small open economy framework, an outside monetary authority such as the ECB, and population growth, factors that are important in accounting for aggregate fluctuations in Spain. The model is estimated with Bayesian techniques and data from the last two decades. Beyond describing the properties of the model, we perform different exercises to illustrate the potential of MEDEA, including historical decompositions, long-run and short-run simulations, and counterfactual experiments.

Keywords

DSGE models Likelihood estimation Bayesian methods 

JEL Classification

C11 C13 E30 

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Copyright information

© The Author(s) 2010

This article is published under license to BioMed Central Ltd. Open Access This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Authors and Affiliations

  • Pablo Burriel
    • 1
  • Jesús Fernández-Villaverde
    • 2
  • Juan F. Rubio-Ramírez
    • 3
  1. 1.Banco de EspañaMadridSpain
  2. 2.University of Pennsylvania, FEDEA, NBER, and CEPRPhiladelphiaUSA
  3. 3.Duke University, Federal Reserve Bank of Atlanta, and FEDEADurhamUSA

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