Incorporating Damped Harmonic Oscillator in DSGE Models

Wei Chun Hsu

Papers from arXiv.org

Abstract: This paper integrates the damped harmonic oscillator into DSGE models to better capture delayed economic adjustments. By introducing a damping coefficient, I model economic recoveries as under-damped, critically damped, or over-damped processes. Numerical simulations illustrate how different damping levels affect recovery speed and stability. This approach enhances DSGE models' realism, offering insights into historical economic crises and improving macroeconomic forecasting.

Date: 2025-02
New Economics Papers: this item is included in nep-dge
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