This paper presents an algorithm to solve recursive systems, formulated in discrete or continuous time, which have an endogenous state variable. The basis of the algorithm is a fixed point equation in the function from the state variables to the control variables.

This paper incorporates the timing of childbearing into a growth model with endogenous fertility. It analyzes a model in which individuals' human capital stock depends positively on their education and parental human capital and in which producing and raising children and acquiring human capital...

Even though pieces of empirical evidence individually may corroborate an economic theory, their joint existence may refute that same theory. We discuss examples concerning testing for omitted variables, simultaneity, and rational expectations in the context of general-to-simple versus...

This paper presents a method for solving a system of first order linear differential equations with constant coefficients when the elements of the forcing vector are step functions. The analysis presented in the text has been programmed for use in the computer simulation of linear continuous...

Under general conditions, linear decision rules of agents with rational expectations are equivalent to restricted error corrections. However, empirical rejections of rational expectation restrictions are the rule, rather than the exception, in macroeconomics. Rejections often are conditioned on...