National Economics University
E-PhD Programme Seminar Series

A Policy-Relevant Structural Macroeconomic Model for Emerging Market Economies with Illustration for Vietnam

by

Michael Binder
Professor of Economics, Goethe University Frankfurt
Chair for International Macroeconomics and Macroeconometrics

Time and Venue
Time: 2.00PM – 3.00PM
Date: Friday, April 4th, 2025
Venue: Room 501, Building A2, National Economics University
207 Giai Phong Road, Hanoi, Vietnam

Abstract

For policy analysis in advanced economies, numerous microfounded, institutionally detailed structural macroeconomic models are available. In contrast, emerging market economies often lack models that contain the necessary institutional details to forecast as accurately as reduced-form time-series models and to conduct credible policy analysis.
This paper focuses on Vietnam as a case study and introduces a New Keynesian-Dynamic Stochastic General Equilibrium (NK-DSGE) model, depicting Vietnam as an open economy interacting with the U.S. and the rest of the world. We incorporate institutional characteristics that are representative of emerging market economies, particularly in Asia, including:
1. International trade within the global value chain and under the dominant currency pricing paradigm.
2. A diverse production sector, including privately-owned, state-owned, and foreign direct investment firms, each facing asymmetric financial frictions.
3. Monetary policy that partially targets the exchange rate.
Our estimated model demonstrates forecasting accuracy for core macroeconomic variables comparable to, and in some cases better than, a state-of-the-art Bayesian Vector Autoregressive model (BVAR). As a result, we argue that this model is well-suited for policy analysis.

Key findings include:
• Vietnam’s output losses from contractionary domestic monetary policy shocks are larger than suggested by previous structural models.
• The transmission of foreign shocks to the Vietnamese economy is weaker than previously assumed.

About presenter
Professor Michael Binder, Founding Dean of the Graduate School of Economics, Finance, and Management in Frankfurt, Germany to the University of Economics and Business, Vietnam National University in Ha Noi. Professor Binder is also a Professor of Economics at Goethe University Frankfurt, where he has held the Chair for International Macroeconomics and Macroeconometrics since 2003. He has played key academic and research roles, published extensively, and received numerous awards. His research focuses on globalization, economic growth, income inequality, macroeconomic modeling, and policy design for emerging markets, along with developing computational methods for structural macroeconomic models and econometric techniques for dynamic panel data analysis.

About series
This seminar series is part of the E-PhD Program at National Economics University. It targets PhD students, early-career researchers, and senior faculty who find interested in doing research in the areas of economics, business, management, and other inter-disciplinary fields of social science. The series is a platform for the wider research community to exchange ideas, networks and collaborations.

Contact
Bach Ngoc Thang
Seminar series coordinator
Room 15.07, Level 15, Building A1
Institute for Sustainable Development
National Economics University
207 Giai Phong Road, Hanoi, Vietnam
M: +84 35 443 1750
E: thangbn@neu.edu.vn
W: https://isd.neu.edu.vn/