Background

Over the years, Dynamic Stochastic General Equilibrium (DSGE) models have become essential tools for policymakers in central banks and ministries of finance. These models play a critical role in understanding and predicting economic fluctuations, as well as assessing the impact of policy measures. By integrating microeconomic foundations, they offer a detailed exploration of how economic agents react to policy changes amidst uncertainty. Through scenario simulations, DSGE models enable policymakers to gauge the potential outcomes of monetary policies, such as interest rate adjustments, and fiscal policies, including government spending and taxation. This analytical framework supports the development of strategies aimed at stabilizing the economy, fostering growth, and mitigating the adverse effects of economic shocks. Consequently, DSGE models are indispensable in contemporary macroeconomic policymaking. In this context, MEFMI, in collaboration with the IMF ICD, will conduct a workshop on Monetary and Fiscal Policy Analysis using DSGE models.

Objectives

The objective of the course is to provide participants with an understanding of the use and interpretation of the DSGE models that are commonly used in central banks and ministries of finance.

Content

The course will cover the following core topics:

1. The real business cycle model
2. The New Keynesian (NK) model
3. Labour market rigidities in the NK model
4. The NK model in an Open Economy
5. Fiscal policy in the NK Model
6. A new Keynesian Model with Financial frictions
7. Bringing DSGE models to the data (1)
8. Bringing DSGE models to the data (2)
9. Policy applications with DSGE models

Target Group

This course targets mid- to senior-level officials from central banks and ministries of finance who are engaged in macroeconomic analysis using DSGE models or the Quarterly Projections Model (QPM).