IMF Working Papers

Overview of the New Calibrated DSGE Model of the Economy of North Macedonia

By Tibor Hlédik, Joana Madjoska, Mite Miteski, Jan Vlcek

August 30, 2024

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Tibor Hlédik, Joana Madjoska, Mite Miteski, and Jan Vlcek. Overview of the New Calibrated DSGE Model of the Economy of North Macedonia, (USA: International Monetary Fund, 2024) accessed November 8, 2024

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Summary

This paper presents a calibrated DSGE model of the economy of North Macedonia that was developed at the National Bank of the Republic of North Macedonia (NBRNM) within a technical assistance project delivered jointly by the International Monetary Fund (IMF) and the Czech National Bank (CNB). The model structure reflects the specific characteristics of the economy of North Macedonia. Namely, it is a small open economy DSGE model featuring a fixed exchange rate regime functioning in an economy experiencing structural changes over time. The paper provides a detailed overview of the theoretical structure of the model, including optimization problems of economic agents and first-order optimality conditions. A particular emphasis is put on model calibration, as well as on model evaluation, including the analysis of impulse responses, shock decompositions and historical in-sample simulation. Compared to other empirical papers focusing on DSGE models, our approach explicitly includes additional trends and wedges needed to capture non-stationary great ratios as well as the Balassa-Samuelson effect. The model has been developed to complement the existing analytic tools used at the NBRNM for policy analyses and to improve the understanding of the underlying drivers of the business cycle of the domestic economy.

Subject: Consumption, Exports, Imports, International trade, National accounts, Return on investment, Technology

Keywords: Calibration, Consumption, DSGE model, Economy of North Macedonia, Exports, Fixed exchange rate, Global, Goods producer, Imports, Impulse response, Investment goods producer, Model of the economy, Return on investment

Publication Details

  • Pages:

    42

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2024/187

  • Stock No:

    WPIEA2024187

  • ISBN:

    9798400289408

  • ISSN:

    1018-5941