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RBCs and DSGEs: The Computational Approach to Business Cycle Theory and Evidence

Author

Listed:
  • Özer Karagedikli

    (Bank of England)

  • Troy Matheson

    (Reserve Bank of New Zealand)

  • Christie Smith

    (Norges Bank (Central Bank of Norway))

  • Shaun Vahey

    (Melbourne Business School, Norges Bank (Central Bank of Norway) , and Reserve Bank of New Zealand)

Abstract
Real Business Cycle (RBC) and Dynamic Stochastic General Equilibrium (DSGE) methods have become essential components of the macroeconomist’s toolkit. This literature review stresses recently developed techniques for computation and inference, providing a supplement to the Romer (2006) textbook, which stresses theoretical issues. Many computational aspects are illustrated with reference to the simple divisible labour RBC model. Code and US data to replicate the computations are provided on the Internet, together with a number of appendices providing background details.

Suggested Citation

  • Özer Karagedikli & Troy Matheson & Christie Smith & Shaun Vahey, 2008. "RBCs and DSGEs: The Computational Approach to Business Cycle Theory and Evidence," Working Paper 2008/17, Norges Bank.
    • Handle: RePEc:bno:worpap:2008_17
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    More about this item

    Keywords

    RBC; DSGE; Computation; Bayesian Analysis; Simulation;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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