Evaluating An Estimated New Keynesian Small Open Economy Model

JEL codes: 
C11, C53, E17
Version Date: 
Dec 2006

This paper estimates and tests a new Keynesian small open economy model in the tradition of Christiano, Eichenbaum, and Evans (2005) and Smets and Wouters (2003) using Bayesian estimation techniques on Swedish data. To account for the switch to an inflation targeting regime in 1993 we allow for a discrete break in the central bank's instrument rule.

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