| Abstract: |
In this paper, we describe a new multicountry open economy SDGE model named
"SIGMA" that we have developed as a quantitative tool for policy analysis. We
compare SIGMA's implications to those of an estimated large-scale econometric
policy model (the FRB/Global model) for an array of shocks that are often
examined in policy simulations. We show that SIGMA's implications for the
near-term responses of key variables are generally similar to those of
FRB/Global. Nevertheless, some quantitative disparities between the two models
remain due to certain restrictive aspects of SIGMA's optimization-based
framework. We conclude by using long-term simulations to illustrate some areas
of comparative advantage of our SDGE modeling framework. |