Examining Business Cycles and Optimal Monetary Policy in a Regional DSGE Model

The Replication file includes the data used for the model, the code to estimate the regional model and code to replicate the figures and tables of the published paper, abstract below.

I construct a dynamic stochastic general equilibrium (DSGE) model consisting of geographic regions and use state level data to estimate the effects that monetary policy and financial shocks have on the four census regions of the United States. The DSGE model I use is constructed around a centralized monetary authority and financial market with regional output, labor and investment markets. I find significant heterogeneity amongst the regional structural parameters of the model, creating different business cycle dynamics for the four regions. The estimated model aligns with other economic studies that suggest that monetary shocks have a greater impact in certain geographic regions in terms of employment, inflation, wages, and consumption. Simulating the estimated model, I find that monetary policy that considers the regional variation in output and inflation can significantly lower the volatility around national output and inflation. The paper’s results suggest that regional macroeconomic conditions should be considered in monetary policy decisions.

本复现文件包含模型所用数据集、区域模型估计代码，以及复刻已发表论文图表与表格的代码，详见下述摘要。
本文构建了一个包含多个地理区域的动态随机一般均衡（Dynamic Stochastic General Equilibrium, DSGE）模型，并利用州级层面数据，估算货币政策与金融冲击对美国四大人口普查区域的影响。本文所采用的DSGE模型以集权化货币当局与金融市场为核心框架，同时纳入区域产出、劳动力与投资市场。本文发现模型的区域结构性参数存在显著异质性，进而使得四大区域呈现出差异化的经济周期运行特征。经估计的模型与其他经济学研究结论一致，即货币政策冲击在特定地理区域对就业、通胀、工资与消费的影响更为显著。通过对估计完成的模型进行仿真模拟，本文发现：若货币政策考量区域层面的产出与通胀差异，可显著降低全国层面产出与通胀的波动幅度。本文研究结果表明，货币政策决策过程中应当纳入区域宏观经济状况这一考量维度。