The aim is to provide students with the tools necessary to independently solve macroeconomic models using numerical software.

Students that successfully passed this course can:

• numerically solve a wide range of determistic and stochastic macroeconomic models (DSGE)
• calibrate a model to empirical data
• quantify the effects of fiscal policy and interpret them economically
• write a master thesis in the field of macroeconomics

Part I: The deterministic neoclassical growth model

• Model description and definition of equilibrium
• Solution methods: Euler equation, Lagrangian approach, Dynamic Programming
• Difference equations: solution and dynamics of linear DE, linearization and local dynamics of nonlinear DE
• Computational implementation: calibration, solution by forward shooting and backward integration
• Project: Fiscal policy in the deterministic neoclassical growth model

Part II: The stochastic neoclassical growth model

• Model description and solution methods
• Stochastic difference equations: Impulse Response Functions, linearization and certainty equivalence
• Computation implementation: solving DSGE models with Dynare
• Project: Policy analysis in a DSGE model using Dynare

The course is split into two parts. Each part consists of several classroom sessions followed by a project that must be worked out independently.

For further information see http://www.econ.tuwien.ac.at/mkerndler/downloads/dynmod_syllabus_ss2019.pdf

Grading is based on two projects, which have to be worked out independently during the semester.

Prior knowledge of dynamic economic models (in particular the Ramsey growth model) is advantageous but not necessary. The computational implementation of the projects should be done in MATLAB. Students who have never worked with MATLAB before or have not used it for a while, are expected to go though an introductory guide before (a reference is provided in the detailed syllabus on the course webpage).