GLOBAL FINANCIAL CRISIS, EUROPEAN CENTRAL BANK AND FINANCIAL POSITION OF ECONOMIC AGENTS: A DYNAMIC COMPUTABLE GENERAL EQUILIBRIUM MODEL FOR ITALY

This study examines a changing trend of consumption and investment of the economic agents, viz.: social class, government, firms and rest of the world, in the implementation of European Central Bank’s Quantitative Ease (QE) policy. The study constructs a financial social accounting matrix (FSAM) for Italian economy for the year 2009. A dynamic computable general equilibrium model (DCGE) is calibrated on FSAM, using GAMS, to analyze the impact of money flow on the behavior of consumption and investments. The findings of the study confirm the positive impact of ECB’s monetary policy on the level of investment and consumption