A welfare analysis of policies for risk averse preferences is handicapped within linear or linearized models and their certainty equivalence property. I calculate the optimal policy in a nonlinear stochastic dynamic general equilibrium model. Then I estimate the posterior density of structural...

A welfare analysis of a risky policy is impossible within a linear or linearized model and its certainty equivalence property. The presented algorithms are designed as a toolbox for a general model class. The computational challenges are considerable and I concentrate on the numerics and...