A DSGE model with partial euroization: the case of the Macedonian economy

This paper describes the theoretical structure and estimation results for a DSGE model Macedonian economy. Having as benchmark of Copaciu et al. (2015), modified to allow fixed exchange rate, we are able match relatively well volatility observed in data. Given monetary policy regime place, debt deflation channel is more important relative financial accelerator one when compared flexible rate case. The lack balance sheet effects no significant differences terms net worth evolution across two types entrepreneurs impulse response functions evaluated. However, shocks related sector appear be especially investment, domestic interest spreads, illustrating relevance including frictions model. With not acting shock absorber, external relevant CPI inflation rate. drop GDP associated with pandemic mainly reflects negative innovations consumption preference permanent technology shock.