An Estimated Two-Country DSGE Model to Analyse Monetary Policy with Heterogeneous Agents : Euro Area and the US Economy

An Estimated Two-Country DSGE Model to Analyse Monetary Policy with Heterogeneous Agents : Euro Area and the US Economy | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article An Estimated Two-Country DSGE Model to Analyse Monetary Policy with Heterogeneous Agents : Euro Area and the US Economy Franck Xavier signe, Jean-Christophe POUTINEAU, Jean Marie Gankou This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-3608001/v2 This work is licensed under a CC BY 4.0 License Status: Posted Version 2 posted You are reading this latest preprint version Show more versions Abstract This paper seeks to quantitatively assess the key role in an open economy of heterogeneity in the conduct of monetary policy in the Euro area and the US. We take into account the fact that these two economies trade with each other and with the rest of the world, as well as the role played by the exchange rate in their trade. Using Bayesian estimation techniques, we estimate two models that take these specificities into account, one with representative agents (RANK model), the other with heterogeneous agents (TANK model). Analysis of the Bayes ratio and the characteristics of the two models shows that the TANK model plays a key role in the conduct of monetary policy in the Euro area and the US, and in mitigating cycles and fluctuations. The US economy is more sensitive to heterogeneity than the Euro area economy, as the differences in parameters between the models are greater in the US than in the Euro area. JEL Classification: E21 , E31 , E40 , E50 , E52 , E61 Heterogeneity RANK Monetary Policy New Keynesian Model US EU Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 2 posted You are reading this latest preprint version Show more versions Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-3608001","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":250563763,"identity":"fdc2e5fe-9296-4be3-a7f8-73e2f7cea519","order_by":0,"name":"Franck Xavier signe","email":"data:image/png;base64,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","orcid":"https://orcid.org/0009-0009-2935-9897","institution":"University of Rennes: Universite de Rennes","correspondingAuthor":true,"prefix":"","firstName":"Franck","middleName":"Xavier","lastName":"signe","suffix":""},{"id":250563764,"identity":"d0ba9c1a-3cbd-4038-a603-427d5639353d","order_by":1,"name":"Jean-Christophe POUTINEAU","email":"","orcid":"","institution":"University of Rennes: Universite de Rennes","correspondingAuthor":false,"prefix":"","firstName":"Jean-Christophe","middleName":"","lastName":"POUTINEAU","suffix":""},{"id":250563765,"identity":"69869ee4-e98a-4c29-8dea-78a9045334d5","order_by":2,"name":"Jean Marie Gankou","email":"","orcid":"","institution":"University of Yaounde II: Universite de Yaounde II","correspondingAuthor":false,"prefix":"","firstName":"Jean","middleName":"Marie","lastName":"Gankou","suffix":""}],"badges":[],"createdAt":"2023-11-14 03:42:02","currentVersionCode":2,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-3608001/v2","doiUrl":"https://doi.org/10.21203/rs.3.rs-3608001/v2","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":53112622,"identity":"bc748a4f-416d-42d5-bb86-0b52e220925d","added_by":"auto","created_at":"2024-03-20 18:00:24","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":2153180,"visible":true,"origin":"","legend":"","description":"","filename":"PaperFranckXavierSigne.pdf","url":"https://assets-eu.researchsquare.com/files/rs-3608001/v2_covered_376f2880-7fc2-4f97-96d1-db57b2c6825d.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eAn Estimated Two-Country DSGE Model to Analyse Monetary Policy with Heterogeneous Agents : Euro Area and the US Economy\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Heterogeneity, RANK, Monetary Policy, New Keynesian Model, US, EU","lastPublishedDoi":"10.21203/rs.3.rs-3608001/v2","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-3608001/v2","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper seeks to quantitatively assess the key role in an open economy of heterogeneity in the conduct of monetary policy in the Euro area and the US. 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