EasyEcon

Deterministic business-cycle dynamics

Basic Real Business Cycle Model

A stripped-down RBC notebook where a representative household smooths consumption after a temporary productivity shock, generating impulse responses in output, investment, and capital.

Macroeconomics Business cycle Advanced EasyEcon / Marimo Growth, business cycles, and open economy
Focus

Temporary TFP shocks, impulse responses, and propagation

Change preferences, technology, depreciation, and shock size to see how a one-period TFP disturbance propagates through a closed economy with endogenous saving.

What to explore

Change parameters and watch the model adjust.

  • Capital share, discount factor, risk aversion, depreciation, baseline TFP, and one-period shock size
  • Initial capital and simulation horizon for deterministic impulse responses

Core ideas

Interpret the mechanics before you chase the graphs.

  • RBC keeps the intertemporal optimisation core of Ramsey but uses it to study fluctuations rather than only steady states.
  • Because households smooth consumption, temporary productivity shocks move investment sharply and capital adjusts gradually.
  • Impulse responses are persistent because capital is a state variable even when productivity itself reverts immediately.

Learning goals

What this model should help students internalize.

  • Connect Ramsey-style intertemporal optimisation to short-run business-cycle dynamics.
  • Interpret how a temporary productivity shock moves output, consumption, and investment on impact and over time.
  • See why capital accumulation propagates a transitory disturbance beyond the initial shock period.

Prerequisites

Concepts to review before diving in.

  • Ramsey or Euler-equation intuition
  • Comfort with capital accumulation and steady-state reasoning

EasyEcon interactive

Basic RBC notebook

EasyEcon / Marimo

On phones, the full-screen view gives the cleanest notebook reading experience.

Open full screen

Deferred notebook load

Temporary TFP shocks, impulse responses, and propagation

Change preferences, technology, depreciation, and shock size to see how a one-period TFP disturbance propagates through a closed economy with endogenous saving.

Open full screen
The EasyEcon Marimo/WASM bundle loads only when requested or when the panel scrolls near view on fast connections.

Next models to study

Keep moving through the track.

Macroeconomics Business cycle Advanced EasyEcon / Marimo

Persistent business-cycle dynamics

Stochastic RBC Model with AR(1) Shocks

Vary shock persistence, innovation volatility, and core preference parameters to see how a stochastic TFP process generates realised paths and sample moments for output, consumption, and investment.

AR(1) productivity, stochastic simulation, and propagation Open model
Macroeconomics Open economy Advanced EasyEcon / Marimo

Advanced macroeconomics

Small Open Economy Model

Explore how productivity shifts, world interest rates, and impatience shape consumption, external borrowing, and the current account over time.

World interest rates, current account, and smoothing Open model