Front Matter Page

IMF staff papers

Robert Flood

Editor and Committee Chair

Ayhan Kose

Co-Editor

David Einhorn

Assistant Editor

Jelena Kmezic

Research Assistant

Rosalind Oliver

Administrative Coordinator

Editorial Committee
Eduardo Borensztein	Laura Kodres
Tito Cordelia	Prakash Loungani
Giovanni Dell’Ariccia	Donald J. Mathieson
Enrica Detragiache	Gian Maria Milesi-Ferretti
Atish R. Ghosh	Chris Papageorgiou
Olivier Jeanne	Jorge Roldos
Andrei Kirilenko	Antonio Spilimbergo

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Editorial Committee
Eduardo Borensztein	Laura Kodres
Tito Cordelia	Prakash Loungani
Giovanni Dell’Ariccia	Donald J. Mathieson
Enrica Detragiache	Gian Maria Milesi-Ferretti
Atish R. Ghosh	Chris Papageorgiou
Olivier Jeanne	Jorge Roldos
Andrei Kirilenko	Antonio Spilimbergo

The objective of IMF Staff Papers is to publish high-quality research on a variety of topics of interest to a broad audience including academics and policymakers in the member countries of the Fund. IMF Staff Papers is open to outside submissions. The papers selected for publication in the journal are subject to an extensive review process using both internal and external referees. IMF Staff Papers also welcomes outside comments, criticisms, and interesting replications of published work. The views presented in published papers are those of the authors and should not be attributed to or reported as reflecting the position of the IMF, its Executive Board, or any other organization mentioned herein.

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Front Matter Page

International Monetary Fund

Volume 55 Number 2

IMF staff papers

2008

EDITOR’S NOTE

The Editor invites from contributors outside the IMF brief comments (not more than 1,000 words) on published articles in IMF Staff Papers. These comments should be addressed to the Editor, who will forward them to the author of the original article for reply. Both the comments and the reply will be considered for publication.

The data underlying articles published in IMF Staff Papers (where available) may be obtained from the journal’s website (www.palgrave-journals.com/imfsp). Readers are invited to use these data to expand on the material in the articles, and the journal will consider publishing such work.

Front Matter Page

© 2008 by the International Monetary Fund

ISBN 978-1-58906-723-3

International Standard Serial Number: ISSN 1020-7635

This serial publication is catalogued as follows:

International Monetary Fund

IMF staff papers — International Monetary Fund. v. 1–Feb. 1950–

[Washington] International Monetary Fund.

• • v. tables, diagrs. 26 cm.

• Three no. a year, 1950–1977; four no. a year, 1978–

• Indexes:

  • Vols. 1–27, 1950–80, 1 v.

• ISSN 1020-7635 = IMF staff papers — International Monetary Fund.

• 1. Foreign exchange—Periodicals. 2. Commerce—Periodicals.

• 3. Currency question—Periodicals.

HG3810.15 332.082 53-35483

Contents

Special Global Economy Model Issue

• Foreword

  • Robert P. Flood

  • Getting to Know the Global Economy Model and Its Philosophy

  • Douglas Laxton

  • The Global Economy Model: Theoretical Framework

  • Paolo Pesenti

  • The Impact on the United States of the Rise in Energy Prices: Does the Source of the Energy Market Imbalance Matter?

  • Jared Bebee and Ben Hunt

  • Oil Price Movements and the Global Economy: A Model-Based Assessment

  • Selim Elekdag, Rene Lalonde, Douglas Laxton, Dirk Muir, and Paolo Pesenti

  • Productivity and Global Imbalances: The Role of Nontradable Total Factor Productivity in Advanced Economies

  • Pietro Cova, Massimiliano Pisani, Nicoletta Batini, and Alessandro Rebucci

  • Inflation Targeting and Price-Level-Path Targeting in the Global Economy Model: Some Open Economy Considerations

  • Donald Coletti, René Lalonde, and Dirk Muir

  • The Macroeconomic Costs and Benefits of Adopting the Euro

  • Philippe Karam, Douglas Laxton, David Rose and Natalia Tamirisa

  • Why It Pays to Synchronize Structural Reforms in the Euro Area Across Markets and Countries

  • Luc Everaert and Werner Schule

Foreword

Flood Robert P. Editor

IMF Staff Papers (2008) 55, 211–212. doi:10.1057/imfsp.2008.10

This special issue of IMF Staff Papers, edited by Douglas Laxton, is devoted to the Global Economy Model (GEM). The GEM and the IMF’s other dynamic stochastic general equilibrium models—the Global Fiscal Model and the Global Integrated Monetary and Fiscal Model—are now used widely inside the Fund and in a number of central banks worldwide.

The issue consists of eight papers. In the first paper, Douglas Laxton discusses the philosophy of GEM and explains, in some examples, how GEM modelers find solutions to their systems of nonlinear equations. In the second paper, Paolo Pesenti lays out in detail the structure of GEM, explaining how the various equations in GEM are derived from individual and firm-level self-interested maximizing behavior and how individual decisions interact with government policy rules. The remaining six papers are specific applications of the GEM structure to a variety of real problems and policy issues.

While the Laxton and Pesenti papers are reasonably self-contained, the six application papers, which make no effort to be self-contained, represent a publishing experiment for IMF Staff Papers. The application papers are much-condensed versions of working papers with identical titles all available on the IMF Staff Papers website. In the working papers, the authors lay out in more detail the models with which they are working and there is a considerable repetition concerning model setup across papers, as they all start from the same basic model laid out by Pesenti. In the versions published here, authors explain the ways in which their models deviate from the GEM standard and present their main experimental results. Full replication instructions can be found in the working paper versions. Data and programs are available on the IMF Staff Papers website.