Online Appendix to "Quantitative properties of sovereign default models: solution methods"
Leonardo Martinez and
Technical Appendices from Review of Economic Dynamics
This document describes how we evaluate the accuracy of the solution of the baseline sovereign default model using the test proposed by den Haan and Marcet (1994). We show that the solutions obtained using Chebyshev collocation and cubic spline interpolation approximate the equilibrium with reasonable accuracy and illustrate the challenges that arise when the test is applied to the solution obtained using the discrete state space technique.
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