Quantitative Dynamic Macroeconomics  

Quantitative Dynamic Macroeconomics (Exercise)

Lecturer: Prof. Dr. Thomas Steger
Date: Monday, 1.15 - 2.45 p.m.
Start: October 15, 2018
Language: English
: PC-Pool 4 (IZ07)


A. An Introduction to Mathematica (nb; pdf; relax_example)

B. Dynamic Macroeconomic Models

1. Solow model (analytical solution, linearization, "shooting", relaxation) (nb; pdf)
2. Ramsey model (linearization, backward integration, relaxation) (nb; pdf)
3. Economic growth with subsistence consumption (nb; pdf)
4. Education and economic growth (nb; pdf; normalization)
5. R&D-based economic growth
6. History versus expectations (nb_Model; nb_compact)
7. Growth under Non-Renewable Resources


Model-based analysis: three steps

  • Step #1: set up an appropriate (!) macroeconomic model
  • Step #2: calibrate the model to match observables
  • Step #3: solve the calibrated model numerically

Methodical skills

  • Solve prominent dynamic general equilibrium models numerically.
  • Apply powerful relaxation algorithm (Trimborn et al., 2008) implemented in Mathematica.
  • Students will be equipped with required knowledge to set up and numerically solve dynamic macroeconomic models.


Students are expected to conduct 'little quantitative exercises'. More precisely, there are two options: (i) Select a research paper from the branch of dynamic macroeconomics and evaluate the theoretical model numerically. (ii) Think of an interesting empirical phenomenon and try to replicate these phenomena by employing a simple model. Some suggestions comprise:

  1. A Small Climate Change Model (Set up and solve a minimal DICE model to think about the basic mechanisms behind climate change)
  2. Growing like West Germany post WW2: Employment, Investment and Income (Neoclassical growth model with endogenous labor supply)

References: Numerics of Dynamic Systems and Mathematica

  1. Abell, M. and J. Braselton, Differential Equations With Mathematica, 2004, Elsevier.
  2. Gräbe and Kofler, Mathematica - Einführung, Anwendung, Referenz, 5. Auflage, 2007, Pearson.
  3. Huang, C.J. and P.S. Crooke, Mathematics and Mathematica for Economists, Blackwell Publisher, 1997.
  4. Weiß, Christian H., Mathematica, Eine Einführung, 2. Auflage, Dezember 2008, RRZN-Handbücher, Universität Hannover.

letzte Änderung: 14.10.2018