February 3, 2017

Case Study: DSGE Model Interface

DSGE Xerte course with powtoon video


Liyao Dong has worked with her academic Will Tayler on developing training for the Dynamic stochastic general equilibrium (DSGE) model which is used to explain the effect of economic policy on the behaviour of agents and the dynamics of the economy as a whole.

It’s one of the most popular macro-economic models in recent years, but it’s difficult to understand when you first try to get to know it, and it’s hard to learn by oneself without proper supervision. To make the learning process more efficient, Liyao and Will decide to introduce DSGE model in a less academic way to make the DSGE model more approachable for learners.

Tools used

After talking to the technical support in ISS department, Liyao decided to use Powtoon to make the video and use Xerte software to illustrate the whole structure of the project.

Powtoon is a perfect tool for making an animation. By capturing the major characters of the 3 sectors in the DSGE model, household, firms, and central bank in the animation, the watchers will have a basic understanding of the problems the DSGE model is trying to describe.

In terms of Xerte, the software is aimed at users who need a rapid authoring tool that can easily be used to create media-rich, interactive and highly accessible content without needing to know any of the underlying technology. It’s an ideal tool for the project to create a clear structure to illustrate the DSGE model with multiple media documents. Every staff and student in Lancaster can access the Xerte very easily through

Project Outcome

Powtoon videos and other kinds of medias to illustrate the model in a relatively vivid way were used to create a Xerte course. You can access the course here:

DSGE Xerte Course

Example of the PowToon video within Xerte course


Problems encountered and lessons learned

Originally, Will wanted to make the simulation process of the DSGE model more simplified so that students without solid background can simulate the model, too. However, this can be really technical and it requires highly advanced coding skills, which even the ISS department cannot overcome in a short period.

As they could not solve the problem directly, the project worked towards the main goal of making DSGE model more approachable using other ways. This lead to the basic mathematical knowledge being presented and providing some Dynare code for fundamental DSGE models in Xerte. This meant that students can copy the code and use Matlab to simulate the results themselves.

Xerte course with text

Example of a text page within the Xerte course