Dynamic stochastic general equilibrium (DSGE) models facilitate macroeconomic analysis and policy-making in central banks, as well as government and non-government organizations (NGOs). DSGE models, such as the European Central Bank’s Smets-Wouters framework, perform time-based macroeconomic general equilibrium analysis of interactions between economic variables.
Central bank economists use MATLAB and add-on toolboxes, often with third-party tools such as Dynare and IRIS, to develop and analyze DSGE models and create fancharts. They use Optimization Toolbox and Statistics Toolbox to run estimation, compute the steady state of nonlinear models, and apply Bayesian statistical techniques. Symbolic Math Toolbox provides symbolic and analytical capabilties for performing general equilibrium modeling.