Project Aim

A dynamic stochastic general equilibrium (DSGE) model is the state-of-the-art approach to properly address dynamic, intertemporal and stochastic macroeconomic issues. The model focuses on the dynamic effects of policies, addressing not only the long-term impacts but also the short-term adjustment in a stochastic environment with uncertainty in oil prices, real business cycle etc. The purpose of this project is to develop a DSGE model calibrated to the Saudi economy. The model will be designed so as to represent the most relevant characteristics of the Saudi economy to provide a meaningful analysis not only of current policies but also other policies that could eventually be implemented. The model will be useful to complement the perspective on the macroeconomic impact of public policies in the Kingdom– energy, fiscal, environmental, financial, monetary policies -to the suite of models currently used at KAPSARC. Further, the project aims to build a user-friendly simulation platform to assess the quantitative impact of a variety of policies that may be useful to interested stakeholders.


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