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Simulating a Simple Real Business Cycle Model Using Excel

Author

Listed:
  • Toru Hokari

    (University of Tsukuba)

  • Masaki Iimura

    (University of Tsukuba)

  • Seiji Murakoshi

    (University of Tsukuba)

  • Yoshiko Onuma

    (University of Tsukuba)

Abstract

Simulating the real business cycle models is a popular topic in first-year graduate courses on macroeconomics. Usually, Maple and Matlab are used for this purpose, mainly because they can be used both for solving and for simulating the models. Strulik (2004) demonstrates that Excel can be used both for solving and for simulating a standard RBC model. In this paper, we propose a more elementary approach that might be suitable for undergraduate courses. We illustrate (i) how to solve a simple RBC model by hand and (ii) how to use Excel to simulate the solution.

Suggested Citation

  • Toru Hokari & Masaki Iimura & Seiji Murakoshi & Yoshiko Onuma, 2007. "Simulating a Simple Real Business Cycle Model Using Excel," Computers in Higher Education Economics Review, Economics Network, University of Bristol, vol. 19(1), pages 16-20.
    • Handle: RePEc:che:chepap:v:19:y:2007:i:1:p:16-20
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    References listed on IDEAS

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    1. King, Robert G. & Rebelo, Sergio T., 1999. "Resuscitating real business cycles," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 14, pages 927-1007, Elsevier.
    2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    3. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
    4. Roger E. A. Farmer, 1999. "Macroeconomics of Self-fulfilling Prophecies, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062038, April.
    5. Holger Strulik, 2004. "Solving Rational Expectations Models Using Excel," The Journal of Economic Education, Taylor & Francis Journals, vol. 35(3), pages 269-283, July.
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