Introduction to Dynamic Macroeconomic General Equilibrium Models

This book offers an introductory step-by-step course in Dynamic Stochastic General Equilibrium modelling. Modern macroeconomic analysis is increasingly concerned with the construction, calibration and/or estimation and simulation of Dynamic General Equilibrium (DGE) models. The book is intended for graduate students as an introductory course to DGE modelling and for those economists who would like a hands-on approach to learning the basics of modern dynamic macroeconomic modelling. The book starts with the simplest canonical neoclassical DGE model and then gradually extends the basic framework incorporating a variety of additional features, such as consumption habit formation, investment adjustment cost, investment-specific technological change, taxes, public capital, household production, non-ricardian agents, monopolistic competition, etc. The book includes Dynare codes for the models developed that can be downloaded from the book's homepage. The second edition is identical to the first with the exception of a revised appendix to Chapter 2. The revised appendix can be downloaded free of charge in the accompanying downloads section.

Table of Contents:
PART I Introduction to DSGE modelling Chapter 1 Introduction Macroeconomic DSGE Modelling DSGE software Book organization Bibliography Chapter 2 The Canonical Dynamic Macroeconomic General Equilibrium model Introduction Households Alternative functional forms for the utility function The firms Alternative functional forms of the production function Model Equilibrium Model Equilibrium(Competitive Equilibrium) Model Equilibrium(Central Planning) The Steady State The Dynamic Stochastic General Equilibrium model Equations of the model and calibration Equilibrium equations Calibration Aggregate productivity shock Conclusions Bibliography PART II Deviations from the Permanent Income-Life Cycle hypothesis Chapter 3 Habit Formation Introduction Habit formation The model Households The firms Equilibrium Equations of the model and calibration Total Factor Productivity shock Conclusions Bibliography Chapter 4 Non-Ricardian Agents Introduction Ricardian and Non-Ricardian Agents The model Ricardian Households Non-Ricardian Households Aggregation The firms Equilibrium of the model Equations of the model and calibration Total Factor Productivity shock Conclusions Bibliography PART III Investment and Capital Accumulation Chapter 5 Investment adjustment costs Introduction Investment adjustment costs The model Households The firms Equilibrium of the model Equations of the model and calibration Total Factor Productivity Shock Conclusions Bibliography Chapter 6 Investment-Specific Technological Change Introduction Investment-specific technological change The model Households The firms Equilibrium of the model The balanced growth path Equations of the model and calibration Investment-Specific Technological shock Conclusions Bibliography PART IV The government Chapter 7 Taxes Introduction Taxes The model Households The firms The government Equilibrium of the model Equations of the model and calibration The Laffer curve Taxes changes Total Factor Productivity shock Conclusions Bibliography Chapter 8 Public Spending Introduction Public spending The model Households The firms The government Equilibrium of the model An alternative functional form for aggregate consumption Equations of the model and calibration Public consumption change Conclusions Bibliography Chapter 9 Public Capital Introduction Public capital The model Households Firms The government Equilibrium of the model Equations of the model and calibration Public investment shock Conclusions Bibliography PART V Time Decisions Chapter 10 Human Capital Introduction Human Capital The Model Households Firms Equations of the model and calibration Total Factor Productivity shock Conclusions Bibliography Chapter 11 Home Production Introduction Home Production The model Households The goods market sector Home production sector Household’s maximization problem Equilibrium of the model Equations of the model and calibration Total Factor Productivity shock Conclusions Bibliography PART VI Imperfect competition Chapter 12 Monopolistic Competition Introduction Monopolistic Competition The model Households The firms Equilibrium of the model Equations of the model and calibration Total Factor Productivity Shock Conclusions Bibliography Index

About the Author :
José L. Torres is Associate Professor of Economics, Head of the Department of Economics, Faculty of Economics, University of Málaga (Spain). His current research areas include: Technological Change, Economic Growth, Dynamic General Equilibrium modelling. He has published several books and a large number of papers in journals as Information Economics and Policy, Public Choice, Macroeconomic Dynamics, Journal of Macroeconomics, Eastern European Economics, Empirical Economics, Economic Modelling, Open Economies Review, Economic Letters, Journal of International Financial Markets, Institutions and Money, SERIES, and Economic Issues.