Recently, there has been many applications of perturbation methods for solving stochastic dynamic general equilibrium models. However, in standard applications of the perturbation method, the Taylor expansion is always computed around the deterministic steady state. Because of nonlinearities,...

As it is now well known, in the framework of DSGE models taking into accounts agents expectations, the fully unconstrained optimal policy (the Ramsey policy) has the main drawback of being time inconsistent: the authority has an incentive to recompute the optimal policy in each period in order...

With the development of DSGE modelling, welfare is often used as a criteria for comparison of alternative policies. As one must rely on numerical approximation to solve DSGE models, one should wonder abnout the accuracy of welfare measures used in the comparison. Kim and Kim had already shown a...

This paper illustrates using a very simple model that admits a close form solution that takes risk into account how to apply the existing numerical methods in a very simple way. Contrary to most existing models to teach solution methods, this model possesses non trivial properties as far as risk...