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Salim Ergene
''The Impacts of Monetary and Fiscal Policies in the USA: A Bayesian DSGE Approach''
( 2016, Vol. 36 No.3 )
I estimate an open economy DSGE model by using Bayesian estimation technique. Monetary policy officials responded to shocks to inflation and output gap actively in the past, however they have weakly reacted to shocks to inflation and output gap over the last fifteen years. Additionally, fiscal policy officials have not focused on smoothing fiscal policies in recent years. Impulse response functions imply that smoothing policies in the past confronted severe macroeconomic volatilities. Though the estimated coefficients in the Philips curve imply that past inflation rate is also crucial for the current inflation rate, forward looking behaviour is still predominant and the data for each parameter is informative.
Keywords: monetary policy, fiscal policy, bayesian estimation
Manuscript Received : Jan 10 2016 Manuscript Accepted : Jul 17 2016

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