Simulating a Simple Real Business Cycle Model Using Excel

Simulating the real business cycle models is a popular topic in first-year graduate courses on macroeconomics. Usually, Maple and Matlab are used for this purpose, mainly because they can be used both for solving and for simulating the models. Strulik (2004) demonstrates that Excel can be used both for solving and for simulating a standard RBC model. In this paper, we propose a more elementary approach that might be suitable for undergraduate courses. We illustrate (i) how to solve a simple RBC model by hand and (ii) how to use Excel to simulate the solution.