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Structural Gaussian mixture vector autoregressive model with application to the asymmetric effects of monetary policy shocks

2020-07-09 · Savi Virolainen

A structural Gaussian mixture vector autoregressive model is introduced. The shocks are identified by combining simultaneous diagonalization of the reduced form error covariance matrices with constraints on the time-varying impact matrix. This leads to flexible identification conditions, and some of the constraints are also testable. The empirical application studies asymmetries in the effects of the U.S. monetary policy shock and finds strong asymmetries with respect to the sign and size of the shock and to the initial state of the economy. The accompanying CRAN distributed R package gmvarkit provides a comprehensive set of tools for numerical analysis.

📄 PDF Abstract BibTeX arXiv:2007.04713

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