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arXiv · 2502.06528

Incorporating Damped Harmonic Oscillator in DSGE Models

Wei Chun Hsu
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Abstract

This paper integrates the damped harmonic oscillator into DSGE models to better capture delayed economic adjustments. By introducing a damping coefficient, I model economic recoveries as under-damped, critically damped, or over-damped processes. Numerical simulations illustrate how different damping levels affect recovery speed and stability. This approach enhances DSGE models' realism, offering insights into historical economic crises and improving macroeconomic forecasting.

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Wei Chun Hsu. 2025-02-10. Incorporating Damped Harmonic Oscillator in DSGE Models. https://arxiv.org/abs/2502.06528

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