The system above contains 10 equations in 10 endogenous variables (y, y*, d, d*, nx, e, rc, rc*, ru, ru*), as well two shocks, u and u*, that can move GDP, its components, exchange rates, and interest rates. B. Simulation Results Figures 1 and 2 show the results of simulating the model under alternative assumptions about the shocks and monetary policy reaction.
In this process, we must determine the timing of further adjustment of the degree of monetary accommodation by taking into account growth and inflation developments, financial imbalance conditions, and the impacts of changes in the monetary policies of major economies.