We develop numerically stable stochastic simulation approaches for solving dynamic economic models. We rely on standard simulation procedures to simultaneously compute an ergodic distribution of state variables, its support and the associated decision rules. We differ from existing methods,...

One issue often overlooked in dynamic fiscal policy analysis is the importance of assumptions made regarding individuals' abilities to use capital markets to transfer income across time. We focus on the impact of borrowing restrictions on consumption functions within the life cycle framework,...

Maximum likelihood estimation of structural models is often viewed as computationally difficult. This impression is due to a focus on the Nested Fixed-Point approach. We present a direct optimization approach to the general problem and show that it is significantly faster than the NFXP approach...