Figure 15.6 shows the difference between Greek and German 10-year bond yields from 2007-2013. Answer the following questions:
a. What does this data represent?
b. In the Smets-Wouters DSGE model, what type of shock is this?
c. How does this shock affect the macroeconomy in the Smets-Wouters DSGE model? Explain.
Figure 15.6: 10-Year Bond Yields: Greece minus Germany
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)

Question

Figure 15.6 shows the difference between Greek and German 10-year bond yields from 2007-2013. Answer the following questions:
a. What does this data represent?
b. In the Smets-Wouters DSGE model, what type of shock is this?
c. How does this shock affect the macroeconomy in the Smets-Wouters DSGE model? Explain.
Figure 15.6: 10-Year Bond Yields: Greece minus Germany  
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)

Quizplus · Accepted Answer

The Answer of Figure 15.6 shows the difference between Greek and German 10-year bond yields from 2007-2013. Answer the following questions:
a. What does this data represent?
b. In the Smets-Wouters DSGE model, what type of shock is this?
c. How does this shock affect the macroeconomy in the Smets-Wouters DSGE model? Explain.
Figure 15.6: 10-Year Bond Yields: Greece minus Germany  
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)

Figure 156 Shows the Difference Between Greek and German 10-Year Bond