A structural model for policy analysis and forecasting: NZSIM

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Güneş Kamber; Chris McDonald; Nicholas Sander; Konstantinos Theodoridis
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Kamber, Güneş, Chris McDonald, Nick Sander and Konstantinos Theodoridis (2016). ‘Modelling the business cycle of a small open economy: The Reserve Bank of New Zealand's DSGE model’, Economic Modelling, Elsevier, Volume 59(C), Pages 546-569, DOI: https://doi.org/10.1016/j.econmod.2016.08.013.

We describe the underlying structure of the new forecasting and policy model used at the Reserve Bank of New Zealand. This paper outlines the dynamic stochastic general equilibrium part of the model, which is deliberately kept small so that it is easily understood and applied in the forecasting context. We also discuss the key transmission channels in the model, estimate the model's parameters and evaluate its ability to explain New Zealand data.