Koiti Yano

(Research Fellow, Economic and Social Research Institute, Cabinet Office)

This paper is an introduction to Dynare and New Keynesian, dynamic stochastic general equilibrium models. In recent years, micro-founded macroeconomic models is a hot topic in monetary policy analysis, for example, Yun (1996), Gali (2002). A simple new Keynesian model is often called new IS-LM. Christiano et al. (2005) propose a medium-scale DSGE model (hybrid new IS-LM), and the extensions of it is often used in governments and central banks. This paper shows simulating new IS-LM and hybrid new IS-LM using Dynare. Moreover, we show simulating hybrid new IS-LM with liquidity-constraint household to analyze fiscal policy.