{"id":2570,"date":"2026-01-27T16:46:51","date_gmt":"2026-01-27T16:46:51","guid":{"rendered":"https:\/\/blogs.mathworks.com\/finance\/?p=2570"},"modified":"2026-01-27T18:29:14","modified_gmt":"2026-01-27T18:29:14","slug":"central-bank-of-the-bahamas-uses-matlab-and-dynare-to-model-climate-and-tourism-shocks","status":"publish","type":"post","link":"https:\/\/blogs.mathworks.com\/finance\/2026\/01\/27\/central-bank-of-the-bahamas-uses-matlab-and-dynare-to-model-climate-and-tourism-shocks\/","title":{"rendered":"Central Bank of The Bahamas Uses MATLAB and Dynare to Model Climate and Tourism Shocks"},"content":{"rendered":"<blockquote>\n<div style=\"border-left: 5px solid #ccc; padding-left: 20px; margin: 20px 0; font-style: regular; font-size: 0.9em; color: #000000;\">&#8220;It [MATLAB] was used in Dynare in order to promote the accuracy and the ease of generating this model.\u201d<br \/><cite style=\"font-style: normal; font-weight: bold; color: #555;\">\u2014 Allan Wright, Manager, Central Bank of the Bahamas<\/cite><\/div>\n<\/blockquote>\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<figure class=\"wp-block-video\"><video controls src=\"https:\/\/blogs.mathworks.com\/finance\/files\/2026\/01\/Allan-snippet-with-captions-v4.mp4\"><\/video><\/figure>\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<div class=\"is-horizontal is-content-justification-left is-layout-flex wp-container-1 wp-block-buttons has-custom-font-size\" style=\"font-size:15px;font-style:normal;font-weight:500;text-transform:none\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-text-color has-background wp-element-button\" href=\"https:\/\/uk.mathworks.com\/videos\/a-dynamic-stochastic-general-equilibrium-analysis-of-a-small-open-economy-with-tourism-1760424531412.html\" style=\"background-color:#0076a8\" target=\"_blank\" rel=\"noreferrer noopener\">Watch the Full Presentation<\/a><\/div>\n<\/div>\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<h1>Key Outcomes<\/h1>\n<ul>\n<li>Sector-specific modelling separates tourism and non-tourism sectors for granular analysis<\/li>\n<li>Quantified vulnerabilities inform climate resilience and diversification strategies<\/li>\n<li>MATLAB\u00ae and Dynare enable rapid prototyping and simulation of dynamic stochastic general equilibrium (DSGE) models<\/li>\n<li>Policy insights support disaster recovery planning and long-term economic stability<\/li>\n<\/ul>\n<h1>Background<\/h1>\n<p>Tourism accounts for about 70% of the Bahamas\u2019 output. Climatic events and foreign demand fluctuations pose significant risks to economic stability. The Central Bank needed a way to quantify these vulnerabilities and test policy responses to shocks such as hurricanes and changes in US tourism demand.<\/p>\n<h1>Challenge<\/h1>\n<p>Traditional aggregate models could not capture sector-specific dynamics. The Central Bank required a flexible modelling framework to simulate climate-related shocks and foreign demand changes, and to assess their impact on output, consumption, inflation, and exchange rates.<\/p>\n<h1>Solution<\/h1>\n<p>Allan Wright and his team built a DSGE model using MATLAB and Dynare. The model separates tourism and non-tourism sectors, incorporates flexible exchange rate dynamics, and simulates climatic and foreign demand shocks. MATLAB enabled rapid development and clear visualisation of results.<\/p>\n<p>This approach also provides a foundation for nowcasting \u2013 short-term forecasting techniques that can improve responsiveness to emerging shocks. &nbsp;<\/p>\n<h1>Results<\/h1>\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"http:\/\/blogs.mathworks.com\/finance\/files\/2026\/01\/image-for-user-story_faint-border-1024x723.png\" alt=\"\" class=\"wp-image-2596\" width=\"768\" height=\"542\"\/><\/figure>\n<\/div>\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<ul>\n<li>Tourism output can fall by 42% after a major climatic shock, with overall output down 35%<\/li>\n<li>Household consumption declines by about 0.9%<\/li>\n<li>Inflation spikes initially due to supply constraints but stabilises by the 15th period<\/li>\n<li>Variance decomposition shows climatic shocks have the largest impact on domestic output and prices<\/li>\n<\/ul>\n<p>These insights support investment in climate-resilient infrastructure, diversification of tourism products, and enhanced disaster recovery planning.<\/p>\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<h1>Explore Related Topics<\/h1>\n<ul>\n<li>Watch the full session <a rel=\"noreferrer noopener\" href=\"http:\/\/mathworks.com\/videos\/a-dynamic-stochastic-general-equilibrium-analysis-of-a-small-open-economy-with-tourism-1760424531412.html\" target=\"_blank\">here<\/a><\/li>\n<li>Explore dynamic stochastic general equilibrium (DSGE) models: <a rel=\"noreferrer noopener\" href=\"https:\/\/www.mathworks.com\/discovery\/dsge-models.html\" target=\"_blank\">https:\/\/www.mathworks.com\/discovery\/dsge-models.html<\/a><\/li>\n<li>Learn how to model climate stress scenarios: <a rel=\"noreferrer noopener\" href=\"https:\/\/www.mathworks.com\/discovery\/climate-stress-testing.html\" target=\"_blank\">https:\/\/www.mathworks.com\/discovery\/climate-stress-testing.html<\/a><\/li>\n<li>Understand physical risk modeling techniques: <a rel=\"noreferrer noopener\" href=\"https:\/\/www.mathworks.com\/discovery\/physical-risk.html\" target=\"_blank\">https:\/\/www.mathworks.com\/discovery\/physical-risk.html<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<div class=\"overview-image\"><img decoding=\"async\"  class=\"img-responsive\" src=\"http:\/\/blogs.mathworks.com\/finance\/files\/2026\/01\/image-for-user-story_faint-border-1024x723.png\" onError=\"this.style.display ='none';\" \/><\/div>\n<p>\n&#8220;It [MATLAB] was used in Dynare in order to promote the accuracy and the ease of generating this model.\u201d\u2014 Allan Wright, Manager, Central Bank of the Bahamas<\/p>\n<p>Watch the Full&#8230; <a class=\"read-more\" href=\"https:\/\/blogs.mathworks.com\/finance\/2026\/01\/27\/central-bank-of-the-bahamas-uses-matlab-and-dynare-to-model-climate-and-tourism-shocks\/\">read more >><\/a><\/p>\n","protected":false},"author":233,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[40,16],"tags":[],"_links":{"self":[{"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/posts\/2570"}],"collection":[{"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/users\/233"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/comments?post=2570"}],"version-history":[{"count":34,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/posts\/2570\/revisions"}],"predecessor-version":[{"id":2616,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/posts\/2570\/revisions\/2616"}],"wp:attachment":[{"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/media?parent=2570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/categories?post=2570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.mathworks.com\/finance\/wp-json\/wp\/v2\/tags?post=2570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}