This paper provides a methodological contribution to the empirical literature on stochastic economic growth. The augmented Solow-Swan model with stochastic capital accumulation rates and labor force growth implies that the steady-state labor productivity level towards which an economy converges...

This paper proposes a moment-matching method for approximating vector autoregressions by finite-state Markov chains. The Markov chain is constructed by targeting the conditional moments of the underlying continuous process. The proposed method is more robust to the number of discrete values and...