This book offers an introductory step-by-step course to Dynamic Stochastic General Equilibrium modelling. Modern macroeconomic analysis is increasingly concerned with the construction, calibration and/or estimation and simulation of Dynamic General Equilibrium (DGE) models. The book is intended for graduate students as an introductory course to DGE modelling and for those economists who would like a hands-on approach to learning the basics of modern dynamic macroeconomic modelling. The book starts with the simplest canonical neoclassical DGE model and then gradually extends the basic framework incorporating a variety of additional features, such as consumption habit formation, investment adjustment cost, investment-specific technological change, taxes, public capital, household production, non-ricardian agents, monopolistic competition, etc. The book includes Dynare codes for the models developed that can be downloaded from the book s homepage.

PART I. Introduction to DSGE modelling Chapter 1 Introduction Chapter 2 The Canonical Dynamic Macroeconomic General Equilibrium model PART II. Deviations from the Permanent Income-Life Cycle hypothesis Chapter 3 Habit Formation Chapter 4 Non-Ricardian Agents PART III. Investment and Capital Accumulation Chapter 5 Investment adjustment costs Chapter 6 Investment-Specific Technological Change PART IV. The government Chapter 7 Taxes Chapter 8 Public Spending Chapter 9 Public Capital PART V. Time Decisions Chapter 10 Human Capital Chapter 11 Home Production PART VI. Imperfect competition Chapter 12 Monopolistic Competition