A Simple and Intuitive Method to Solve Small Rational Expectations Models

We present a non-linear solution method of saddlepoint dynamics in discrete time optimization problems. It is based on the backward attractivity of the stable manifold and is very easy to implement. After an introduction to the general method we present two applications. First we consider the deterministic neoclassical growthmodel and demonstrate accuracy and stability of the method. Second we solve a basic real business cycle model.

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Year of publication:	2001-06
Authors:	Strulik, Holger ; Brunner, Martin
Institutions:	Institut für Makroökonomie und Wirtschaftspolitik, Fachbereich Volkswirtschaftslehre
Subject:	Saddlepoint Problems \| Non-linear Dynamics \| Stochastic Economic Growth

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Extent:	application/pdf
Series:	Quantitative Macroeconomics Working Papers.
Type of publication:	Book / Working Paper
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; C63 - Computational Techniques ; O40 - Economic Growth and Aggregate Productivity. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005582278