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The Krusell-Smith Algorithm: Are Self-fulfilling Equilibria Likely?

Cozzi, Marco - Economics Department, Queen's University - 2014

I investigate whether the popular Krusell and Smith algorithm used to solve heterogeneous-agent economies with … the new initial guess to compute the equilibrium with this algorithm. In a sequence of cases, differing only in the … result lies in a self-correcting mechanism present in the algorithm: compared to the equilibrium law of motion, a candidate …

Persistent link: https://www.econbiz.de/10010885962

Occasionally Binding Collateral Constraints in RBC Models

Espino, Emilio; Hintermaier, Thomas - Society for Economic Dynamics - SED - 2004

The real business cycle (RBC) model pioneered by Kydland and Prescott (1982) was a fundamental step to understand business cycles. This literature, in general, claims that aggregate technology shocks are the main ingredient to explain these fluctuations. However, in order to match various...

Persistent link: https://www.econbiz.de/10005069549

Adverse Selection, Risk Sharing and Business Cycles

Veracierto, Marcelo - Federal Reserve Bank of Chicago - 2014

I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since...

Persistent link: https://www.econbiz.de/10011093788

Heterogeneity in Macroeconomics and the Minimal Econometric Interpretation for Model Comparison

Cozzi, Marco - Economics Department, Queen's University - 2014

This paper formally compares the fit of various versions of the incomplete markets model with aggregate uncertainty, relying on a simple Bayesian empirical framework. The models differ in the degree of households' heterogeneity, with a focus on the role of preferences. For every specification,...

Persistent link: https://www.econbiz.de/10011085028

Comparing Solution Methods for DSGE Models with Labor Market Search

Lan, Hong - Sonderforschungsbereich 649: Ökonomisches Risiko, … - 2014

I compare the performance of solution methods in solving a standard real business cycle model with labor market search frictions. Under the conventional calibration, the model is solved by the projection method using the Chebyshev polynomials as its basis, and the perturbation methods up to...

Persistent link: https://www.econbiz.de/10010895344

Search complementarities, aggregate fluctuations, and fiscal policy

Fernández-Villaverde, Jesús; Yu, Yang; Zanetti, Francesco - 2019

We develop a quantitative business cycle model with search complementarities in the inter-firm matching process that entails a multiplicity of equilibria. An active equilibrium with strong joint venture formation, large output, and low unemployment coexists with a passive equilibrium with low...

Persistent link: https://www.econbiz.de/10012003850

The 'Matthew Effect' and Market Concentration : Search Complementarities and Monopsony Power

Fernández-Villaverde, Jesús; Mandelman, Federico; Yu, Yang - 2021

This paper develops a dynamic general equilibrium model with heterogeneous firms that face search complementarities in the formation of vendor contracts. Search complementarities amplify small differences in productivity among firms. Market concentration fosters monopsony power in the labor...

Persistent link: https://www.econbiz.de/10013241380

The "Matthew Effect" and Market Concentration : Search Complementarities and Monopsony Power

Fernández-Villaverde, Jesús; Mandelman, Federico; Yu, Yang - 2021

Persistent link: https://www.econbiz.de/10013245629

The "Matthew Effect" and Market Concentration : Search Complementarities and Monopsony Power

Fernández-Villaverde, Jesús; Mandelman, Federico; Yu, Yang - 2021

Persistent link: https://www.econbiz.de/10014048708

Firms' heterogeneity, endogenous entry, and exit decisions

Totzek, Alexander - 2009

As GDP is highly correlated with both entering and exiting firms, we develop a totally microfounded DSGE model with endogenous firms entry as well as exit decisions. We show that the simplifying assumption of a constant firms' death rate made by the recent literature on DSGE modelling can lead...

Persistent link: https://www.econbiz.de/10010299744