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Teaching dynamic General equilibrium macroeconomics to undergraduates using a spreadsheet

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  • Bongers, Anelí
  • Gómez, Trinidad
  • Torres, José L.

Abstract

Dynamic Stochastic General Equilibrium (DSGE) models have become the fundamental theoretical framework in current macroeconomic analysis. However, with very few exceptions, they are not taught to undergraduate students, in spite of the fact that they form the core of standard economics graduate programmes. One of the main barriers for teaching DSGE models at an undergraduate level is not theoretical complexity, but rather, computer skills, as these models have to be solved numerically using specific software. In this paper, we propose a method for solving DSGE models using a spreadsheet, with computer software widely known by students: Microsoft Excel. We consider two different alternative approaches to solving DSGE models in Excel. First, the model can be solved using Excel’s Solver tool. Second, the model can be linearized and numerically simulated directly in a spreadsheet. We think that these approaches can pave the way for teaching DSGE modelling to students in an undergraduate advanced macroeconomics course by removing the limitations imposed by the requisite computer skills.

Suggested Citation

  • Bongers, Anelí & Gómez, Trinidad & Torres, José L., 2020. "Teaching dynamic General equilibrium macroeconomics to undergraduates using a spreadsheet," International Review of Economics Education, Elsevier, vol. 35(C).
    • Handle: RePEc:eee:ireced:v:35:y:2020:i:c:s1477388020300244
    DOI: 10.1016/j.iree.2020.100197
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    References listed on IDEAS

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    1. Chu, Angus C., 2018. "From Solow to Romer: Teaching endogenous technological change in undergraduate economics," International Review of Economics Education, Elsevier, vol. 27(C), pages 10-15.
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    11. Mark Setterfield, 2018. "The Macro Pedagogy Debate: Teaching DSGE to Undergraduates Symposium," The Journal of Economic Education, Taylor & Francis Journals, vol. 49(3), pages 237-241, July.
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    Cited by:

    1. Bongers, Anelí & Molinari, Benedetto & Torres, José L., 2022. "Computers, Programming and Dynamic General Equilibrium Macroeconomic Modeling," MPRA Paper 112505, University Library of Munich, Germany.

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    More about this item

    Keywords

    Advanced macroeconomics; Dynamic General equilibrium models; Undergraduate education; Spreadsheet;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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