Guerrieri, Luca; Iacoviello, Matteo - In: Journal of Monetary Economics 70 (2015) C, pp. 22-38
The toolkit adapts a first-order perturbation approach and applies it in a piecewise fashion to solve dynamic models with occasionally binding constraints. Our examples include a real business cycle model with a constraint on the level of investment and a New Keynesian model subject to the zero...