Analyzing the aggregate demand in Vietnam based on Dynamic Stochastic General Equilibrium model

Abstract

This paper uses a Dynamic Stochastic General Equilibrium model (DSGE) to simulate the relationship between
macroeconomic variables of Vietnam and then apply to analyze the aggregate demand in Vietnam. In particular, an
analysis of the output gap variable’s reaction function (variation representing for GDP) from economic shocks using a
DSGE model shows that it is suitable for the economic theory as well as former research. Our forecasting result about
the aggregate demand recognizes the potential pressure on inflation in Vietnam both this year and in the next period.