The neoclassical growth model with quasi-geometric discounting is shown by Krusell and Smith (2000) to have multiple solutions. As a result, value-iterative methods fail to converge. The set of equilibria is however reduced if we restrict our attention to the interior (satisfying the Euler...

The paper proposes a theory of the wage arrears phenomenon in transition economies. We build on the standard one-sector neoclassical growth model. The neoclassical firms in transition make losses and use wage arrears as the survival strategy. At the agents' level, the randomness in the timing...

We use aggregation theory to investigate the link between one-consumer and multi-consumer economies under a quasi-linear class of preferences. Our study is carried out in the context of the neoclassical growth model. The quasi-linear preferences considered are additive in consumption and leisure...

We investigate the impact of preference shocks on the aggregate dynamics of the U.S. economy in the context of a neoclassical growth model derived from aggregation. The aggregation result we use is as follows: if markets are complete and if agents have identical preferences of the addilog type,...

This paper presents a two-sector growth model of international trade that can account for the key features of the postwar world development experience. Two sectors represent the traditional primitive production and the modern sophisticated production. Due to increasing returns in the modern...

This paper analyzes a complete market neoclassical economy with heterogeneous agents. Agents have addilog preferences and receive idiosyncratic labor productivity shocks. We show that at the aggregate level, such an economy behaves as if there was the representative consumer who faces shocks to...

We assess gains from parallel computation on Backlight supercomputer. We find that information transfers are expensive. To make parallel computation efficient, a task per core must be sufficiently large, ranging from few seconds to one minute depending on the number of cores employed. For small...

We introduce an envelope condition method (ECM) for solving dynamic programming problems. The ECM method is simple to implement, dominates conventional value function iteration and is comparable in accuracy and cost to Carroll’s (2005) endogenous grid method. Codes are available.

We use the stochastic simulation algorithm, described in Judd et al. (2009), and the cluster-grid algorithm, developed in Judd et al. (2010a), to solve a collection of multi-country real business cycle models. The following ingredients help us reduce the cost in high-dimensional problems: an...