Stabilization bias for a small open economy: The case of New Zealand
Date
2010
Authors
Liu, Philip
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Publisher
Elsevier
Abstract
Using a fully specified DSGE model, this paper investigates the relationship between a central bank's policy objectives and the stabilization bias. The model is estimated using data from New Zealand. Results indicate that the size of the stabilization bias is nearly twice as large for a small open economy relative to that of closed economies. The results also indicate that the size of the stabilization bias is increasing with respect to the policymaker's preference for exchange rate stabilization.
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Keywords
Keywords: Bayesian estimation; DSGE models; Small open economy; Stabilization bias
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Source
Journal of Macroeconomics
Type
Journal article
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2037-12-31
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