Solving the Stochastic Growth Model by Linear-Quadratic Approximation and by Value-Function Iteration.
This article describes three approximation methods I used to solve the growth model (Model 1) studied by the National Bureau of Economic Research's nonlinear rational-expectations-modeling group project, the results of which are summarized by Taylor and Uhling (1990). The methods involve computing exact solutions to models that approximate Model 1 in different ways. The first two methods approximate Model 1 about its nonstochastic steady state. The third method works with a version of the model in which the state space has been discretized. A value-function iteration method is used to solve that model.
Year of publication: |
1990
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Authors: | Christiano, Lawrence J |
Published in: |
Journal of Business & Economic Statistics. - American Statistical Association. - Vol. 8.1990, 1, p. 23-26
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Publisher: |
American Statistical Association |
Saved in:
Saved in favorites
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