Liyao Dong – MSc Student, Department of Economics
The dynamic stochastic general equilibrium (DSGE) model is a complex economic model that is, in highly simplified terms, used to explain the effect economic policy on the behaviour of agents and the dynamics of the economy as a whole. Due to the scale and complexity of the numerous interactions it is often only taught in full at PhD level, despite its widespread use for guiding economic policy at central banks.
In order to make the topic more accessible Dr William Tayler and postgraduate student Liyao Dong aim to take advantage of presentation and simulation software to present a visual tool to display these interactions. They hope to be able to give students an understanding of the effects of economic decisions and shocks without the need for them to become bogged down in the complex programming of the model.
The project offers an excellent opportunity for synergy for Liyao, linking closely with her own dissertation subject. She hopes that the project will enhance her understanding of the area and allow her to bring the benefits into both her dissertation and the project. She recognises the complexity of the project and hopes to have developed a tool that will provide a benefit to students by its conclusion.
The biggest challenge she expects to face is finding the right balance between the detail of the model and the usability. Liyao knows that if this balance is not right then the tool may not provide sufficient value to students or academics as a learning aid.
Project Update: DSGE Model Interface: Project Update August 2016
This project is now complete. The full case study and outcome is available to view – Case Study: DSGE Model Interface
Image taken from Nguyen, A.D.M. (2015) Financial Frictions and the Volatility of Monetary Policy in a DSGE model. Available at: https://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2015_006.pdf (Accessed: 4 May 2016)