Computers, Programming and Dynamic General Equilibrium Macroeconomic Modeling

Anelí Bongers, Benedetto Molinari and Jose Torres ()

MPRA Paper from University Library of Munich, Germany

Abstract: Dynamic stochastic general equilibrium (DSGE) models nowadays undertake the bulk of macroeconomic analysis. Their widespread use during the last 40 years reflects their usefulness as a scientific laboratory in which to study the aggregate economy and its responses to different shocks, to carry out counterfactual experiments and to perform policy evaluation. A key characteristic of DSGE models is that their computation is numerical and requires intensive computational power and the handling of numerical methods. In fact, the main advances in macroeconomic modeling since the 1980s have been possible only because of the increasing computational power of computers, which has supported the expansion of DSGE models as more and more accurate reproductions of the actual economy, thus becoming the prevailing modeling strategy and the dominant paradigm in contemporaneous macroeconomics. Along with DSGE models, specific computer languages have been developed to facilitate simulations, estimations and comparisons of the aggregate economies represented by DSGE models. Knowledge of these languages, together with expertise in programming and computers, has become an essential part of the profession for macroeconomists at both the academic and the professional level.

Keywords: Dynamic stochastic general equilibrium models; Computers; Programming languages; Codes; Computational economics; Dynare. (search for similar items in EconPapers)
JEL-codes: C61 C63 C88 E37 (search for similar items in EconPapers)
Date: 2022-03-22
New Economics Papers: this item is included in nep-cmp, nep-dge, nep-hpe, nep-mac and nep-ore
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