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Incorporating Damped Harmonic Oscillator in DSGE Models

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  • Wei Chun Hsu

Abstract

This paper integrates the damped harmonic oscillator into DSGE models to better capture delayed economic adjustments. By introducing a damping coefficient, I model economic recoveries as under-damped, critically damped, or over-damped processes. Numerical simulations illustrate how different damping levels affect recovery speed and stability. This approach enhances DSGE models' realism, offering insights into historical economic crises and improving macroeconomic forecasting.

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  • Wei Chun Hsu, 2025. "Incorporating Damped Harmonic Oscillator in DSGE Models," Papers 2502.06528, arXiv.org, revised Apr 2025.
    • Handle: RePEc:arx:papers:2502.06528
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    File URL: http://arxiv.org/pdf/2502.06528
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