Macroeconomic policy in Europe: experiments with monetary responses and fiscal impulses

In this paper we discuss the main model properties of NiGEM, the National Institute's large-scale macroeconometric model. NiGEM is a 'New-Keynesian' model where agents display forward-looking behaviour but there are nominal rigidities slowing adjustment. In a number of policy simulations we find there are strong similarities across countries. Nevertheless, Euro Area responses to monetary and fiscal policy are greatest in Germany in NiGEM, whilst these responses are slower in comparison to the US due to greater wage-price inertia. [PUBLICATION ABSTRACT]