Frequently Asked Questions
1. How can I replicate some simulation results of the article of which the model is implemented in the Macroeconomic Model Data Base (MMB)?
The simple and easy way is to use the replication files. As part of the Macroeconomic Model Data Base, we provide the replication package separate from the comparison software. In that package a model code remains as close as possible to the authors' original code or article. Readme files and graphics files make reference to the specific original research findings and provide information on how we came to matching the authors' work.
2. What are the (main) differences between the original model implementation and the version integrated in the MMB platform and used for comparison?
Firstly, all model files contained in the MMB comparison software (MMB model files, hereafter) include the common model data base blocks in addition to the original model implementation in order to simulate comparable objects across models. In Modelbase blocks common MMB variables are defined, a common policy rule is written in terms of common variables, etc. In general, Modelbase blocks are separated by //******* symbols from the rest of the file. Please refer to Section 4 of the MMB User Guide (pages 14-18) for the structure of a MMB model file.
Secondly, the model-specific monetary policy rule is commented out in MMB model files because the common policy rule is introduced.
Thirdly, we add the model economy under flexible prices and wages in a MMB model file in case the original model does not utilize a concept of output gap and therefore does not define the level of output that would be achieved under flexible prices. We add these definitions since all common monetary policy rules include reactions to output gaps.
3. What are the units of shocks commonly used in the MMB?
The MMB simulates impulse response functions to one-unit-shocks. For example, a common monetary policy shock increases on impact one percentage point in the annualized interest rate, in the absence of endogenous reaction variables in a policy rule. A common fiscal policy shock is rescaled such that it leads to one percent increase of GDP share of discretionary government expenditures. One should therefore refer to model files or model replication files to obtain the size of the shock used in the respective paper. Please refer to pages 7-8 of the MMB User guide where we present an example showing how to adjust impulse response functions in accordance with the different size of a shock.
Please note that the other comparison objects, the unconditional variance and autocorrelation functions of common variables, are computed with the empirical distributions of all shocks except for monetary policy shock.
4. How can I add a new model into the MMB?
Adding a new model to the Macroeconomic Model Data Base (MMB) consists of three steps. First, the original model has to be translated into a Dynare mod-file and the common MMB variables have to be defined as functions of the original model variables. Currently, the MMB includes six comparable common variables: annualized quarterly money market rate, year-on-year rate of inflation, annualized quarter-to-quarter rate of inflation, quarterly real GDP, quarterly output gap and discretionary government purchases (share in GDP). In the next step, the model mod-file must be stored under the model name in a folder with exactly the same label. Lastly, the new model has to be initialized in the MMB interface. Please refer to Section 5 of the MMB User guide (pages 18-22) for detailed instructions for each step.
5. How can I use my own monetary policy rule in a comparative exercise?
There are two ways to use your own interest rate rule in the MMB as long as the rule can be expressed in terms of common MMB variables such as inflation, output or output gap. First, you can choose an option for "User-specified monetary policy rule" among a list of monetary policy rules. Then a menu with a general form for an interest rate rule will be presented. You can specify coefficient values in front of each variable. Second, you can add a new interest rate rule to a set of programmed common policy rules. Please refer to Section 6 of the MMB User guide (pages 22-23) for detailed instructions for both ways.