Kortelainen, Mika and Mayes, David G. (2001) Using Edge-A Dynamic General Equilibrium Model of the Euro Area. NCRE Online Paper No. 01/01. [Policy Paper]
This paper presents a new dynamic general equilibrium model with some nominal rigidities that has been calibrated on Euro area data. The model includes consumption/saving decisions using a Blanchard stochastic lifetimes approach; valuation of private financial wealth according to the present value of capital income; overlapping Calvo wage contracts in the labour market and a neoclassical supply side with Cobb-Douglas technology. The structure of the model is explained as is its calibration, using data from new Euro area statistics and experience from the US. The model has been developed for both forecasting and policy stimulation purposes.
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