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MEDEA: a DSGE model for the Spanish economy

SERIEs volume 1, pages 175–243 (2010)Cite this article

Abstract

In this paper, we provide a brief introduction to a new macroeconometric model of the Spanish economy named MEDEA (Modelo de Equilibrio Dinámico de la Economía EspañolA). MEDEA is a dynamic stochastic general equilibrium (DSGE) model that aims to describe the main features of the Spanish economy for policy analysis, counterfactual exercises, and forecasting. MEDEA is built in the tradition of New Keynesian models with real and nominal rigidities, but it also incorporates aspects such as a small open economy framework, an outside monetary authority such as the ECB, and population growth, factors that are important in accounting for aggregate fluctuations in Spain. The model is estimated with Bayesian techniques and data from the last two decades. Beyond describing the properties of the model, we perform different exercises to illustrate the potential of MEDEA, including historical decompositions, long-run and short-run simulations, and counterfactual experiments.

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Author information

Authors and Affiliations

  1. Banco de España, Madrid, Spain

    Pablo Burriel

  2. University of Pennsylvania, FEDEA, NBER, and CEPR, Philadelphia, PA, USA

    Jesús Fernández-Villaverde

  3. Duke University, Federal Reserve Bank of Atlanta, and FEDEA, Durham, NC, USA

    Juan F. Rubio-Ramírez

Authors
  1. Pablo Burriel
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  2. Jesús Fernández-Villaverde
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  3. Juan F. Rubio-Ramírez
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Corresponding author

Correspondence to Pablo Burriel.

Additional information

We thank David Taguas and Rafael Domenech for their support and encouragement during the development of MEDEA, Fillipo Ferroni for a very interesting discussion, and participants at numerous seminars for feedback. Beyond the usual disclaimer, we must note that any views expressed herein are those of the authors and not necessarily those of the Banco de España, the Federal Reserve Bank of Atlanta, or the Federal Reserve System. Finally, we also thank the NSF for financial support.

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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License (https://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Burriel, P., Fernández-Villaverde, J. & Rubio-Ramírez, J.F. MEDEA: a DSGE model for the Spanish economy. SERIEs 1, 175–243 (2010). https://doi.org/10.1007/s13209-009-0011-x

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  • DOI: https://doi.org/10.1007/s13209-009-0011-x

Keywords

  • DSGE models
  • Likelihood estimation
  • Bayesian methods

JEL Classification

  • C11
  • C13
  • E30