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@article{ Monteforte2008,
 title = {The economic consequences of Euro-area macro-modelling shortcuts},
 author = {Monteforte, Libero and Siviero, Stefano},
 journal = {Applied Economics},
 number = {19},
 pages = {2399-2415},
 volume = {42},
 year = {2008},
 doi = {https://doi.org/10.1080/00036840701858075},
 urn = {https://nbn-resolving.org/urn:nbn:de:0168-ssoar-242456},
 abstract = {Should euro-area economies be modelled in an aggregate (area-wide) fashion
or in a disaggregate (multi-country) one? This paper tackles that question
from both a statistical and an economic viewpoint. From a statistical
viewpoint, aggregation bias criteria are found to signal that the degree of
structural heterogeneity among euro-area economies is such that the loss
of information entailed by an aggregate modelling approach may be far
from trifling. From an economic viewpoint, we investigate the following
issue: Are those statistically detectable heterogeneities of any practical
relevance when it comes to supporting monetary policy decision-making?
To provide an answer to this question, we compute simple optimal monetary
policy reaction functions on the basis of either an aggregate model or
a disaggregate one, and compare the associated welfare losses. The results
suggest that the welfare under-performance of an area-wide-model-based
rule is not only non negligible, but also robust with respect to a number
of sensitivity analyses.},
 keywords = {Geldpolitik; aggregation; monetary policy; Aggregation}}