This paper introduces a nonlinear certainty-equivalent approximation method for dynamic stochastic problems. We first introduce a novel, stable, and efficient method for computing the decision rules in deterministic dynamic economic problems. We use the results as nonlinear and global...

This paper puts forward a systematic approach to teaching simple dynamic stochastic general equilibrium (DSGE) models to undergraduates. It proceeds in the following way: first, the structural model of the economy, which includes the households' and firms' problems, is presented and...

We introduce a novel simulated certainty equivalent approximation (SCEQ) method for solving dynamic stochastic problems. Our examples show that SCEQ can quickly solve high-dimensional finite- or infinite-horizon, stationary or non- stationary dynamic stochastic problems with hundreds of state...

A Dynamic Stochastic Labor-Market Disequilibrium (DSLMD) model is proposed for Keynesian business cycle analysis. It shares the type of micro-foundation known from neoclassical Dynamic Stochastic General Equilibrium (DSGE) models but characterizes economic mechanisms consistent with Traditional...

Chapter 1. Introduction -- Chapter 2. Finite Difference Equations and Systems of Difference Equations in Rational Expectations -- Chapter 3. Models of Representative Agents and Real Business Cycle Models -- Chapter 4. A Simplified Illustration of Numerical Solution Methods of DSGE Models With...