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RBCs and DSGEs:The Computational Approach to Business Cycle Theory and Evidence

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Real Business Cycle (RBC) and Dynamic Stochastic General Equilibrium (DSGE) methods have become essential components of the macroeconomist’s toolkit. This literature review stresses recently developed (often Bayesian) techniques for computation and inference, providing a supplement to the Romer (2006) textbook treatment which stresses theoretical issues. Many computational aspects are illustrated with reference to the simple divisible labour RBC model familiar to graduate students from King, Plosser and Rebelo (1988), Christiano and Eichenbaum (1992), Campbell (1994) and Romer (2006). Code and US data to replicate the computations are provided on the Internet, together with a number of appendices providing background details.

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Paper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Discussion Paper Series with number DP2007/15.

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Length: 62 p.
Date of creation: Nov 2007
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Handle: RePEc:nzb:nzbdps:2007/15

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  2. Creel, Michael & Kristensen, Dennis, 2011. "Indirect Likelihood Inference," Dynare Working Papers 8, CEPREMAP.
  3. Ramiro Rodríguez Revilla, 2011. "Modelos de equilibrio general dinámicos y estocásticos para Colombia 1995-2011," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT.
  4. Wolden Bache, Ida & Sofie Jore, Anne & Mitchell, James & Vahey, Shaun P., 2011. "Combining VAR and DSGE forecast densities," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 35(10), pages 1659-1670, October.
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