The Impact of Monetary Policy Shocks in a Small Open Economy
The Impact of Monetary Policy Shocks in a Small Open Economy

Summary/Abstract: In this paper I use an open economy dynamic stochastic general equilibrium model and estimate it for Romanian economy using Bayesian techniques. I estimate then the impact of domestic and external monetary policy shocks. Domestic interest shocks produce strong effects on output and exchange rate, and moderate ones on inflation. The effects are not very persistent. The results show that monetary policy shocks from Euro Area do matter for Romanian economy, but in moderate way. Overall, monetary policy in Romania is found to be less gradual but more conservative than the ECB one.

• Details
• Contents