After successful completion of the course, students are able to...

• 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 using the Lagrangian approach
• Difference equations: solution and dynamics of linear DE, linearization and local dynamics of nonlinear DE
• Computational implementation: calibration, solution using Stacked Newton method
• Project: Fiscal policy in the deterministic neoclassical growth model

Part II: The stochastic neoclassical growth model

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

Presentation combined with interactive work in Matlab'
Introduction to Dynare
Presentation of sample solutions for the projects

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_ss2020.pdf

The grade 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 TUWEL site of this course).