# Tag Info

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### DSGE models (Dynare) are only based on simulations and approximations? (without data)

Short answer It doesn't seem like you've tried very hard to find estimation using Dynare (google results of "Dynare estimation"). Dynare is in fact capable of doing estimation and typically people ...
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### Textbook on the mathematics of RBC/DSGE models?

The mathematical theory behind DSGE models can be found in any textbook on stochastic dynamic optimisation. One common reference that economists use for this is Stokey, Lucas and Prescott. Of course, ...

### Interest rate rule in monetary DSGE model

I've just solved this problem. First of all, your solution does not make too much sense, as in a simple interest rate rule it must hold that the sum of all coefficients must be greater than one. In ...
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### Intuition for the CES consumption index in New-Keynesian DSGE models

Heuristically, you can think of the integral as just a sum: $$\bar{C} = \left( \sum_{i=1}^n C_i^{1-\frac{1}{\epsilon}} \right)^{\frac{\epsilon}{\epsilon - 1}}$$ where $\bar{C}$ is an index of ...
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### Government expenditure multiplier in the new-Keynesian model?

The "standard" New Keynesian model could be many things, but suppose that we're dealing with the basic log-linearized 3-equation model (intertemporal Euler equation, New Keynesian Phillips curve, and ...
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### Can Dynare solve general equilibrium (GE) models with non-convex adjustment costs?

Short answer: no. Dynare, and linearization/perturbation methods in general, are designed for solving smooth models approximated around a single point in state space (the steady state). A model ...
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### Ultra simple DSGE to implement

As mentioned by Michael quantecon has good resources. Here is an example of very simple DSGE model from quantecon. I am not sure if you can get to as low as 3 equations but here is very simple example ...
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### Ultra simple DSGE to implement

Jordi Galís book "Monetary Policy, Inflation, and the Business Cycle" features the 3-equation "Simple New Keynesian" Model: \begin{align*} \pi_t &= \beta E_t[\pi_{t+1}] + \...
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### Does julia's speed advantage over python make any difference for DSGE modeling?

There are certainly cases where the performance differences between Python and Julia matter, but solving a simple DSGE model is not one of them. There have been some formal comparison exercises (e.g., ...
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### Does julia's speed advantage over python make any difference for DSGE modeling?

Julia is actually a lot faster than Python, also when running DSGE models. The NY FED moved their DSGE model to Julia because it allows them to: Estimate models 10x faster Complete 'solve' test 11x ...
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### What are the assumptions made about fixed points in the dynamics equations of Recursive macroeconomics?

On pages 53-55 of the Stokey, Lucas, with Prescott (1989) book they discuss the Contraction Mapping Theorem. This theorem guarantees existence and uniqueness of the solution (one fixed point). The ...
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### Economic growth in a DSGE model, despite mean-zero shocks

Yes, there are DSGE models that can be used for forecasting. These models typically have a particular kind of steady-state, which is, more precisely, called balanced growth path (BGP). On the BGP (in ...
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### What exactly is certainty equivalence in the context of DSGE models?

Intuitively, it means that the model has such characteristics that "the best we can say" about remaining uncertainty, is that it will be zero. From general experience, we know that it won't be zero, ...
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### intuition behind the blanchard kahn conditions?

The condition that unstable eigenvalues equal in number the control/decision/non-predetermined variables is equivalent to the requirement that a model possess the "saddle point property". Of more ...

### How to derive the measurement equation for the state-space representation of a DSGE model?

First, you can also have a state-space setup for a model which is not log-linearised. It is the combination of the solution of your model (that you get by using Sims, Klein, Binder-Pesaran, or ...

### Can Dynare solve general equilibrium (GE) models with non-convex adjustment costs?

It is generally not possible to make a sharp statement about the types of non-convex costs that Dynare can handle. Many different factors come into play about whether a model can be "solved" by ...
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### State of general equilibrium theories Post Blanchard 2008

To understand why macroeconomists use DSGE as a tool, in general, it's a good idea to read up on the Lucas critique. More colloquially, DSGE models provide macroeconomists with a laboratory that ...
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### Convert DSGE paper to structural econometrics, anything to be noted？

There's no correct method to do this. DSGE guys will estimate the model by doing something like this: plugging in priors for their parameters and then running an optimization that minimizes the ...
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### Separation rate

They consider a model with two islands: a Production island and a Leisure island. Every transition from a period $t$ to a period $t+1$ is split into two parts. People who are in the Production island ...
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### Questions about the future of macroeconomic modeling and the role of simultaneous equation systems

Is there future for DSGE? Well, DSGE stands for dynamic stochastic general equilibrium models. You can’t really model time series appropriately without the dynamic stochastic part, and when it comes ...
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### Are overlapping generation (OLG) models extensions of a DSGE model?

You can find OLG models that do not classify as DSGE (in particular, the model might not be stochastic) as well as DSGE with overlapping generations (contrary to those with infinitely lived agents). ...
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