Fischer, Andreas; Dueker, Michael J; Dittmar, Robert D - Royal Economic Society - RES - 2003
ensure that variation and not the level of the rate is driving the result. Markov switching implies nonlinear decision rules … is to apply Judd's (1998) projection method to capture the nonlinearity in the decision rules. This approach allows for … nonlinear decision rules in a richer set of models with many more state variables than can be solved with grid …