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

  • Özer Karagedikli

    (Bank of England)

  • Troy Matheson

    (Reserve Bank of New Zealand)

  • Christie Smith

    (Norges Bank (Central Bank of Norway))

  • Shaun Vahey

    (Melbourne Business School, Norges Bank (Central Bank of Norway) , and Reserve Bank of New Zealand)

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 techniques for computation and inference, providing a supplement to the Romer (2006) textbook, which stresses theoretical issues. Many computational aspects are illustrated with reference to the simple divisible labour RBC model. 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 Norges Bank in its series Working Paper with number 2008/17.

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Length: 26 pages
Date of creation: 24 Oct 2008
Date of revision:
Handle: RePEc:bno:worpap:2008_17
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