Deterministic Simulations

What you will learn

In these tutorials and videos I will present the perfect foresight approach to simulate DSGE models deterministically. We will cover both the theory and best practices as well as implementation details in Dynare.

Perfect Foresight

  • Perfect Foresight Algorithm

    We cover deterministic simulations in DSGE models also known as perfect foresight simulations and how one can do this in Dynare. Several scenarios are illustrated using a two-country New Keynesian DSGE model with a Zero-Lower-Bound as an example. Dynare specific commands and numerical issues of the Newton algorithm are covered. Finally, we are going to re-implement the Perfect Foresight Algorithm in MATLAB and see that the results are exactly the same.