QUEST is a macroeconomic model to analyse and understand the state of the EU economy. It is developed by DG ECFIN with support from the JRC. The current version QUEST III is applied since 2007.
QUEST III belongs to the class of New-Keynesian Dynamic Stochastic General Equilibrium (DSGE) models that are now widely used by international institutions and central banks. These models have rigorous microeconomic foundations derived from utility and profit optimisation and include frictions in goods, labour and financial markets. With empirically plausible estimation and calibration they are able to fit the main features of the macroeconomic time series. The QUEST III model has been estimated on Euro Area and US data using Bayesian estimation methods.
QUEST III supports questions related to policy formulation, implementation and evaluation. Many of the main applications deal with fiscal and monetary policy interactions. In order to deal with the wide range of policy issues in DG ECFIN, different model versions of the QUEST III model have been constructed, each with a specific focus and regional and sectoral disaggregation.