Dynare is a software platform for handling a wide class of economic models, in particular dynamic stochastic general equilibrium (DSGE) and overlapping generations (OLG) models. The models solved by Dynare include those relying on the rational expectations hypothesis, wherein agents form their expectations about the future in a way consistent with the model. But Dynare is also able to handle models where expectations are formed differently: on one extreme, models where agents perfectly anticipate the future; on the other extreme, models where agents have limited rationality or imperfect knowledge of the state of the economy and, hence, form their expectations through a learning process. In terms of types of agents, models solved by Dynare can incorporate consumers, productive firms, governments, monetary authorities, investors and financial intermediaries. Some degree of heterogeneity can be achieved by including several distinct classes of agents in each of the aforementioned agent categories.
Dynare offers a user-friendly and intuitive way of describing these models. It is able to perform simulations of the model given a calibration of the model parameters and is also able to estimate these parameters given a dataset. In practice, the user will write a text file containing the list of model variables, the dynamic equations linking these variables together, the computing tasks to be performed and the desired graphical or numerical outputs.
A large panel of applied mathematics and computer science techniques are internally employed by Dynare: multivariate nonlinear solving and optimization, matrix factorizations, local functional approximation, Kalman filters and smoothers, MCMC techniques for Bayesian estimation, graph algorithms, optimal control, …
Various public bodies (central banks, ministries of economy and finance, international organisations) and some private financial institutions use Dynare for performing policy analysis exercises and as a support tool for forecasting exercises. In the academic world, Dynare is used for research and teaching purposes in postgraduate macroeconomics courses.
Dynare is a free software, which means that it can be downloaded free of charge, that its source code is freely available, and that it can be used for both non-profit and for-profit purposes. Most of the source files are covered by the GNU General Public Licence (GPL) version 3 or later (there are some exceptions to this, see the file license.txt in Dynare distribution). It is available for the Windows, macOS, and Linux platforms and is fully documented through a user guide and a reference manual. Part of Dynare is programmed in C++, while the rest is written using the MATLAB programming language. The latter implies that commercially-available MATLAB software is required in order to run Dynare. However, as an alternative to MATLAB, Dynare is also able to run on top of GNU Octave (basically a free clone of MATLAB): this possibility is particularly interesting for students or institutions who cannot afford, or do not want to pay for, MATLAB and are willing to bear the concomitant performance loss.
The development of Dynare is mainly done at Cepremap by a core team of researchers who devote part of their time to software development. Currently the development team of Dynare is composed of Stéphane Adjemian (Université du Maine, Gains and Cepremap), Houtan Bastani (Cepremap), Michel Juillard (Banque de France), Frédéric Karamé (Université du Maine, Gains and Cepremap), Junior Maih (Norges Bank), Ferhat Mihoubi (Université Paris-Est Créteil, Epee and Cepremap), George Perendia, Johannes Pfeifer (University of Cologne), Marco Ratto (European Commission, Joint Research Centre - JRC) and Sébastien Villemot (CEPREMAP). Increasingly, the developer base is expanding, as tools developed by researchers outside of Cepremap are integrated into Dynare. Financial support is provided by Cepremap, Banque de France and DSGE-net (an international research network for DSGE modeling). The Dynare project also received funding through the Seventh Framework Programme for Research (FP7) of the European Commission’s Socio-economic Sciences and Humanities (SSH) Program from October 2008 to September 2011 under grant agreement SSH-CT-2009-225149.
Interaction between developers and users of Dynare is central to the project. A web forum is available for users who have questions about the usage of Dynare or who want to report bugs. Training sessions are given through the Dynare Summer School, which is organized every year and is attended by about 40 people. Finally, priorities in terms of future developments and features to be added are decided in cooperation with the institutions providing financial support.