Repository of macro models
This repository contains descriptions of macro-models which relate to papers published or forthcoming in Economic Modelling
Area Wide Model (AWM)
Title of paper: An Area Wide Model (AWM) for the
euro area
Model belongs to: European Central Bank
Authors: Gabriel Fagan, Jerome Henry, Ricardo Mestre (all at the
ECB)
Short description: The AWM is a quarterly estimated structural
macroeconomic model for the euro area. This medium-sized model treats
the euro area as a single economy. The model is designed to have a long-run
equilibrium consistent with neo-classical economic theory while the short-run
dynamics are largely demand-driven. Supply is determined by a production
function. In the long-run, the Phillips curve is vertical and factor demands
are consistent with firms' profit maximisation. In the short-run the output
gap and the unemployment gap affect the price and wage dynamics. The current
version of the AWM is mostly backward-looking, apart from equations for
financial variables. It is largely estimated rather than calibrated, a
specific historical database having been constructed for that purpose.
The model can be simulated under a variety of assumptions regarding fiscal
and monetary policies and agents' expectations. It is used for conducting
policy simulations and forecasting tasks.
JEL classification: C3, C5, E2
Keywords : European Monetary Union, Macroeconometric
Modelling, Euro Area
Country / Continent / Region the model applies to: Euro area
Link address: www.ecb.int/pub/wp/ecbwp042.pdf
(full equation listing in Annex 1)
Disclaimer: Responsibility for the full model structures of the models in this repository rests solely with the authors.