Understanding DSGE models

<i>"This book teaches DSGE models from scratch. It explains the basic economic relations behind the models; discusses their assumptions; derives the results step by step; presents computer codes that solve each model covered in the book; and shows the results. The book will appeal to students, scholars and professionals interested in acquaint themselves with modern macroeconomics and to those searching for a detailed guide for solving DSGE models."</i>

Bernardo Guimarães

Sao Paulo School of Economics – FGV

<i>"[...]The book "UNDERSTANDING DSGE" by Celso J. Costa Junior is an outstanding valuable tool for helping graduate students and researchers cope with the intricacies of setting up Dynamic Stochastic General Equilibrium models.

"[...]Celso J. Costa's book stands out in that it proves very successful in walking the reader through the whole process of setting up a complete Dynamic Stochastic General Equilibrium model, which can be at times daunting enough to discourage the beginners from continuing this long journey.

"At the beginning of many chapters, the author takes pains to explain concepts underlying each model in a simple undergraduate-like -but nonetheless in a detailed- way, using for example a two-periods model to teach the reader how the representative consumer makes the optimal intertemporal choice. This is a feature that clearly puts itself ahead of the game as it makes the textbook accessible to advanced undergraduates as well.

"It patiently teaches how to derive the steady state and the log-linearization involved. Not many competitors, if any, do it in the same detailed user-friendly way as Celso Costa does.

"The boxes that the author intersperses in every chapter explaining and clarifying concepts. They clearly help.

"The content in itself. The first model presented is the Real Business Cycle (RBC) model, which constitutes the backbone of the DSGE models. After it, Celso J. Costa adds frictions to this basic model in a cumulative way: sticky prices, rigid wages, habit formation and hand-to-mouth consumers, adjustment costs and under-utilization of the maximum installed capacity and government.

"[...]Celso Costa's book is an indispensable book intended for the student, be the advanced Econ undergraduate, be the graduate (Masters and PhD) student, and for any researcher avid to learn this modeling technique, and it makes a major contribution to the learning process of this kind of macroeconomic models."</i>

Alejandro C. García Cintado

Department of Economics, Quantitative Methods and Economic History, Universidad Pablo Olavide Sevilla

<i>"The Microfoundations, Intertemporal Decisions and Uncertainty is the center of modern macroeconomics, like Real Business Cycles Model and New Keynesian Model. The book Understanding DSGE written by Professor Costa Junior has the intention to introduce this literature to begin research, where some details about the elaboration of the model studied step by step. This type of approach is not found in other books that analyze this type of models.

"The book’s strong point is the determination of the State-Steady and its linearization in detail and how to put the equilibrium condition in the Dynare."</i>

Armando Vaz Sampaio – Adjunct Professor at Federal University of Paraná.