Solving the Stochastic Growth Model by Using a Recursive Mapping Based on Least Squares Projection.

A method to solve a standard version of a stochastic growth model is decribed. The method uses the equilibrium first-order condition (a Euler equation) and the linear least squares projection operator to construct a recursive mapping to compute the solution. At the solution, the marginal valuation of the end-of-period state (a dual price) satisfies certain orthogonality conditions.

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Year of publication:	1990
Authors:	Labadie, Pamela
Published in:	Journal of Business & Economic Statistics. - American Statistical Association. - Vol. 8.1990, 1, p. 39-40
Publisher:	American Statistical Association

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005532419