The impact of hiking in macroeconomic models At the ECB, we employ a suite of semi-structural, dynamic stochastic general equilibrium (DSGE) and Bayesian vector autoregression (BVAR) models to study the underlying transmission channels of monetary policy and to quantify the impact of changes to monetary policy on financial conditions, the economy and inflation.
Drawing on a suite of models, rather than relying on a single framework, helps us draw more robust policy conclusions. It is inherently difficult to pin down causal relations in empirical macroeconomic models and this is reflected in the wide range of estimates of the impact of monetary policy impulses on macroeconomic variables.