The EAGLE: A Model for Policy Analysis of Macroeconomic Interdependence in the Euro Area

The recent financial crisis is likely to have damaged the potential output of many countries belonging to the euro area. Moreover, the heterogeneity in long‐run macroeconomic performance among Member States may not be sustainable in the presence of strong monetary and financial integration, thus suggesting the need for coordinating structural reforms. Using a multi‐country dynamic general equilibrium model of the euro area, we assess the macroeconomic effects of increasing competition in the labour and services markets in Germany and the rest of the euro area and, in an alternative scenario, Portugal and the rest of the euro area. Our main results suggest that (i) a unilateral increase in competition in the labour and services markets would increase long‐run output; and that (ii) cross‐country coordination would make the macroeconomic performance of the different regions more homogeneous, in terms of both price competitiveness and of real activity.

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“…An increase corresponds to a deterioration. For the details on the construction of the multilateral index, see Gomes et al ().…”

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confidence: 99%

Structural Reforms and Macroeconomic Performance in the Euro Area Countries: A Model‐Based Assessment

Gomes

Jacquinot

Mohr

et al. 2013

International Finance

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“…We also assume that markets for tradable goods are segmented, so that firms can set a different price for each of the three markets. In line with other, dynamic general equilibrium models of the EA (see, among others, Christoffel, Coenen, & Warne, ; Gomes, Jacquinot, & Pisani, ), we include adjustment costs on real and nominal variables, ensuring that consumption, production, and prices react gradually to a shock. On the real side, habits and quadratic costs prolong the adjustment of consumption and investment, respectively.…”

Section: The Modelmentioning

confidence: 99%

“…See, for example, the New Area Wide Model (NAWM, Christoffel et al, ) and the Euro Area and Global Economy Model (EAGLE, Gomes et al, ).…”

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confidence: 99%

Macroeconomic effectiveness of non‐standard monetary policy and early exit. A model‐based evaluation

Burlón

Gerali

Notarpietro

et al. 2017

International Finance

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This paper evaluates the macroeconomic effects of the Eurosystem's expanded asset purchase programme (APP) under alternative assumptions about (i) unwinding the asset positions accumulated under the APP and (ii) current and future paths of the policy rate (forward guidance). To this purpose, we simulate a New Keynesian model of the euro area (EA). Our results are as follows. First, if the monetary authority brings forward the unwinding of its long‐term sovereign bond holdings, the stimulus from the APP on inflation and economic activity is correspondingly reduced. Second, if the monetary authority communicates that the policy rate will be held constant for 1 year instead of 2, the APP would be less effective and the increase in inflation would be halved. Third, an early exit from bond holding subdues the impact of the APP, delaying the normalization of monetary policy conditions after a negative EA‐wide demand shock.

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“…This paper evaluates the macroeconomic effects of simultaneously implementing growth‐friendly fiscal consolidation and competition‐friendly reforms in one European country. The assessment is based on simulating a three‐country large‐scale New Keynesian dynamic general equilibrium model of one country in the euro area (labelled ‘Home’), the rest of the euro area (REA) and the rest of the world (RW) economy, akin to the Eurosystem EAGLE model (Euro Area and Global Economy model, see Gomes et al ) . The euro area (EA) is a two‐region monetary union and, therefore, has a common monetary policy and nominal exchange rate against the RW bloc (the latter has its own monetary policy and currency).…”

Section: Introductionmentioning

confidence: 99%

“…See Gerali et al () for details. See also the New Area Wide Model (NAWM; Christoffel et al ) and Euro Area and Global Economy Model (EAGLE; Gomes et al ).…”

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confidence: 99%

Macroeconomic Effects of Simultaneous Implementation of Reforms

Gerali

Notarpietro

Pisani

2016

International Finance

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This paper evaluates the macroeconomic effects of simultaneously implementing growth-friendly fiscal consolidation and competitionfriendly reforms in one European country by simulating a dynamic general equilibrium model. Our results are as follows. First, in the case of joint implementation, the increase in gross domestic product (GDP) is larger than the sum of GDP increases obtained from implementing reforms separately. Growth-friendly public debt consolidation uses lower interest payments in the long run to permanently reduce tax Ã The views expressed in this paper are those of the authors alone and should not be attributed to the Bank of Italy. We thank

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The EAGLE: A Model for Policy Analysis of Macroeconomic Interdependence in the Euro Area

Abstract: 4Non-technical summary 5

Cited by 74 publications

References 112 publications

Structural Reforms and Macroeconomic Performance in the Euro Area Countries: A Model‐Based Assessment

Structural Reforms and Macroeconomic Performance in the Euro Area Countries: A Model‐Based Assessment

Macroeconomic effectiveness of non‐standard monetary policy and early exit. A model‐based evaluation

Macroeconomic Effects of Simultaneous Implementation of Reforms

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