New Uses for Spreadsheets in Intermediate Macroeconomics: Dynamic Neoclassical and New Keynesian Models

Because modern macroeconomics is by nature dynamic, the mathematics involved are often difficult for undergraduate students to grasp. Unfortunately, numerical examples that are helpful in clarifying other technical areas of economics are very time consuming and even intractable when using pen, paper and calculator. This paper introduces spreadsheet applications that solve a large variety of numerical exercises for two types of dynamic macroeconomic models. These applications revolve around a neoclassical (Solow) growth model, and a new Keynesian IS-LM/AS-AD model. As one of the exercises, the AS-AD model is modified to incorporate the neoclassical assumptions of the permanent income hypothesis and rational expectations.