Morgan (1983) guaranteed that VSS dominated both FSS and SSR. But it is difficult to calculate the optimal sample size and the optimal reservation price both without recall and with full recall. As VSS without recall is a simplification of VSS with full recall, we will present on appendix a VB30...

Several recent papers conclude that U.S. real GDP is trend stationary, implying that all shocks are transitory and long run path is deterministic. These inferences fail to take into account two problems: the distortion of test size in finite samples due to data-based model selection, and the...

Computing the solution to a stochastic optimal control problem is difficult. A method of approximating a solution to a given stochatic optimal problem was developed in [1]. This paper describes a suite of Matlab functions implementing this method of approximating a solution to a given continuous...

Optimization algorithms must be among the most common numerical methods used by economists. Yet, there is surprisingly little guidance on choosing the appropriate one. This problem is most notable with regard to conventional versus global optimizers. Typically, a global optimizer is used when a...