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The paper presents a computationally efficient method to solve overlapping gener- ations models with asset choice. The method is used to study an OLG economy with many cohorts, up to 3 different assets, stochastic volatility, short-sale constraints, and subject to rather large technology shocks....
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Once New Keynesian (NK) theory (see, e.g., Woodford 2003) is combined with a standard model of investment (see, e … elasticity of investment, as implied by standard investment theory. In order to address this puzzle we develop a NK model …
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size and on the prediction horizon. In a corresponding application to real-world data, simple averaging performs best. Uni …
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