Computers, Programming and Dynamic General Equilibrium Macroeconomic Modeling

Bongers, Anelí and Molinari, Benedetto and Torres, José L. (2022): Computers, Programming and Dynamic General Equilibrium Macroeconomic Modeling.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Dynamic stochastic general equilibrium models; Computers; Programming languages; Codes; Computational economics; Dynare.
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C88 - Other Computer Software; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications

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