Impact of Technological Shock on the Sierra Leone Economy: A Dynamic Stochastic General Equilibrium (DSGE) Approach

The neoclassical growth model has emphasised the importance of technology shocks, which supposedly affect macroeconomic variables’ heterogeneously in a small open economy like Sierra Leone. Using Bayesian DSGE methodology for non-linear model, we found that investment-specific technological shock partly explains business cycle fluctuations Moreover, analysis indicates on output, capital, and consumption is more persistent than interest rate. key implication innovation crucial long-term steady-state results also confirm prediction – is, long run, productivity driven only by progress. specified this research largely inward-looking, with minimal role Bank Leone to influence investment technology-related directly. Despite limitation so given fact modelling concept quite new venture at BSL, thoughts have been enhance model’s future capabilities incorporate both monetary bloc external blocs fully assess impact shock’s transmission entire research.