Small-model observable pack
A compact set for a first estimated DSGE.
Core inflationReal GDP growth or output proxyPolicy rate
Models / Route
Structure-first route
Dynamic Stochastic General Equilibrium
DSGE models emerged partly in response to the Lucas critique: if policy changes alter expectations and decision rules, historical correlations alone may stop being reliable guides for new policy experiments. The route begins with that structural break, then moves into toy models, curated observables, and policy experiments.
Section NotesRoute notes
DSGE stays separate from empirical forecasting by starting with equations, shocks, and policy rules before it ever talks about observables.
Indicator data enters later through curated observable packs, so the structural lens stays intact.
RBC is live now as the first toy route, while NK and the extensions frame the estimation and policy layers.
Why DSGE exists
The Lucas critique is the doorway into the structural route.
If policy changes alter expectations and decision rules, historical correlations alone may stop being reliable guides for new policy experiments. DSGE models answer that problem by specifying households, firms, shocks, and policy rules inside one coherent equilibrium system.
From there, the emphasis shifts away from empirical forecasting. The workflow is structure first, then equilibrium conditions, then shocks and policy rules, then curated observables, and only after that estimation or policy comparison.
Empirical forecasting
Data → fit → diagnostics → forecast. Good for baseline projection and live monitoring.
DSGE
Structure → equilibrium → shocks and policy rule → observables → estimation → experiments. Good for shock interpretation and policy analysis.
Product boundary
The page teaches and structures the workflow. It stays browser-scaled and keeps the route legible.
DSGE routes
Structure, observables, and experiments each have their own doorway.
Conceptual doorway
Why DSGE?
Policy changes can alter expectations and decision rules, so the DSGE lane opens with the Lucas critique before the fitting work begins.
The doorway links empirical forecasting with policy structure.
Route
Live route
Solve a toy model
A small structural benchmark and a reference calibration keep shocks, equilibrium conditions, and impulse responses legible.
The live RBC route is the first touchpoint for solving a toy DSGE without estimation overhead.
Route
Curated observables
Estimate with observables
Observed macro data enters here through a defined observable pack. The model template leads and the observables follow.
The New Keynesian route is the cleanest next layer for estimation, filtered shocks, and forecast comparison.
Route
Scenario route
Run policy experiments
Once the structure is in place, policy rules, shock persistence, and alternative scenarios can be compared inside one coherent system.
The route frames DSGE as a disciplined policy laboratory.
Route
Curated observables
Indicator data enters DSGE through observable packs with a defined role.
Demo economy and reference calibration teach the structure. Indicator-based observables test how the structure meets observed macro data.
Extended pack later
Additional observables once the smaller route is stable.
Wages or hoursInvestment growthCredit spreadLong rate or expected policy path
Model templates
The templates stay legible by separating toy benchmarks, estimated cores, and extensions.
Real Business Cycle
Toy benchmarkReference calibrationLive asset
A friction-light toy benchmark that traces technology and government spending shocks through capital accumulation, labor choice, and intertemporal substitution. Use RBC when you want a clean benchmark for shock propagation before you add sticky prices, financial wedges, or heterogeneous agents.
New Keynesian Core
Estimated coreDemo economy and curated observablesPlanned route
Sticky prices, inflation dynamics, and a Taylor rule make NK the workhorse for monetary-policy transmission and the cleanest first route for curated observables. Nominal rigidities and policy credibility sit at the center here, with the real-shock benchmark in the background.
Small-open-economy NK
Open-economy extensionDemo economy and curated observablesPlanned route
Adds exchange rates, external demand, and imported inflation to the sticky-price policy core. Use SOE-NK when trade, exchange rates, or foreign demand shocks matter as much as domestic slack.
TANK
Distribution extensionDemo economy and curated observablesPlanned route
Two-agent New Keynesian structure that separates hand-to-mouth from asset-holding households. Use TANK when distribution matters but you still want a compact, interpretable DSGE core.
HANK-lite
Heterogeneity extensionDemo economy and curated observablesPlanned route
A lighter heterogeneous-agent structural route that keeps liquid and illiquid balance-sheet channels visible. Use HANK-lite when averages hide the transmission channel, but a full HANK stack would be too heavy for the current page.
Financial Accelerator
Macro-finance extensionDemo economy and curated observablesPlanned route
Adds leverage, collateral, and spread dynamics to a structural core so financial amplification becomes explicit. Spreads, collateral values, and balance-sheet weakness move to the center of the shock story here.