‘Build Your DSGE Model in Ten Minutes’: The Role of Dynare in the Development of the Dynamic Stochastic General Equilibrium Approach
This contribution to the history of macroeconomics focuses on the role of a particular computer tool, named Dynare (for "Dynamic rational expectations") in the dissemination in academia and policymaking institutions of dynamic stochastic general equilibrium (DSGE) models. Dynare is a "pre-processor and a collection of routines" (Juillard, 1996, 1) or a "package" for computing software (such as Matlab), aimed at solving, simulating, and estimating non-linear dynamic general equilibrium models. The case of Dynare illustrates how the dissemination across the profession of theoretical principles or modelling practices (such as DSGE models) cannot be thought independently from (at least) two general issues that involve producing computer tools: the issue of tractability (i.e. the existence of a computer algorithm that can solve a mathematical problem within a 'reasonable' amount of time) and the issue of portability (i.e. the ability of circulating and transferring a computer algorithm across models, people, and institutions). This framing of Dynare's history draws a distinction between the algorithm underlying the original version of Dynare (Laffargue, 1990), which constitutes mainly a specific solution to a tractability problem, and Dynare as a software package (Juillard, 1996), which provides portability. The paper follows the development of Dynare, starting with the development of an algorithm by macroeconomists at French CEPREMAP; then, exploring how the development of Dynare provided a specific solution to the issue of portability, hence spreading Dynare worldwide, and more specifically to central banks. References Juillard, Michel. 1996. "DYNARE: A program for the resolution and simulation of dynamic models with forward variables through the use of a relaxation algorithm." CEPREMAP Working Paper 9602. Laffargue, Jean-Pierre. 1990. Résolution d'un modèle macroéconomique avec anticipations rationnelles. Annales d'économie et de statistique, 1990(17): 97-119.
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Keywords: History of macroeconomics, Dynare, CEPREMAP, DSGE models
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