On Real Business Cycle Models in Excel

One of the biggest challenges of teaching macroeconomics to undergraduate students is bridging the gap between intermediate and modern micro-founded macroeconomic models. Model simulations help by allowing students to experiment with the model results without fully solving the model. Some modern macroeconomic models can be simulated in Excel, accommodating students with a limited programming background. For example, Hokari et al. (2007) simulate a simple real business cycle model in Excel. I correct their simulation method, provide a model simulation workbook, and provide a lesson plan to evaluate how well the real business cycle model fits business cycle facts.

by Aaron Popp

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Popp, A. (2026). On Real Business Cycle Models in Excel. Available online at Journal of Economics Teaching, DOI: 10.58311/jeconteach/21ef1ebe806651d78ed315dc03b54ccd4ff175b6

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