Introduction  3

The Model  5

The Core Model  5

The Fiscal Block  10

Calibration  14

Model Validation  14

Historical Data Interpretation  15

Evaluation of Forecast Accuracy  19

Simulations and Scenario Analysis  24

Monetary Policy Shock  24

Fiscal Shock: Transitory versus Persistent Expansion  25

Supply Shock  26

Exchange Rate Shock  28

Demand Shock  29

Conclusion  30

References  31