External Shocks and Monetary Policy in an Oil Exporting Economy

Jean-Pierre Allegret (1) , Mohamed Tahar Benkhodja (2)

1 EconomiX - EconomiX
2 UL2 - Université Lumière - Lyon 2

To investigate the dynamic effect of external shocks on an oil exporting economy, we estimate, using Bayesian approach, a DSGE model based on the features of the Algerian economy. We analyze the impulse response functions of our external shocks according to alternative monetary rules. The welfare cost associated with each monetary policy rule is considered. We find that, over the period 1990–2010, core inflation monetary rule allows better to stabilize both output and inflation. This rule also appears to be the best way to improve a social welfare.

Mots clés: Monetary policy; external shocks; oil exporting economy; Algeria; DSGE model

Domaines: Economies et finances

Jean-Pierre Allegret, Mohamed Tahar Benkhodja. External Shocks and Monetary Policy in an Oil Exporting Economy. Journal of Policy Modeling, 2015, 37 (4), pp.652- 667. ⟨10.1016/j.jpolmod.2015.03.017⟩. ⟨hal-01385986⟩