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Estimated Dynamic Optimization (EDO) Model

About

EDO--short for Estimated Dynamic Optimization-based Model--is a medium-scale New Keynesian dynamic stochastic general equilibrium (DSGE) model of the U.S. economy that has been used at the Federal Reserve Board since 2006.  As with other DSGE models, EDO is optimization-based and can be used for forecasting and policy analysis. Compared with other DSGE models such as Smets and Wouters (AER, 2007), EDO includes greater disaggregation of U.S. domestic spending, notably housing and consumer durables.  Another distinctive feature is the introduction of two production sectors, for fast- and slower-growing industries.  EDO has recently been extended to include unemployment along the lines of Gali, Smets, and Wouters (NBER, 2011).

Articles on the model documentation page provide more information about the EDO model. Another link on this page points to computer code that allows users to run simulations with the EDO model.

NOTE: The programs for simulating the EDO model are written for use with the Dynare software package.  The Dynare package can be downloaded without cost at www.dynare.org Leaving the Board.  While Dynare itself is free, it requires the installation of either Matlab or Octave.  Matlab is a commercial product available at www.mathworks.com. 
Octave is free-ware, and is available at www.gnu.org/software/octave Leaving the Board.

Model disclaimer
Last update: April 14, 2014