Solving recent RBC models using linearization: further reserves

Raouf Boucekkine () and Jean-Francois Fagnart

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: Through a simple example, we show that the successive sophistications introduced in the early RBC models in order to improve their internal propagation mechanisms have actually increased their non-linearities, even locally. Accordingly, linearization-based resolution methods become much more disputableı than they were for early RBC models. Simple comparative studies ofı impulse-response functions are used to illustrate this point. We conclude by pointing at sorne alternative resolution techniques that allow the model builder to take non-linearities into account and/or to handle with the presence of large state spaces.

Keywords: RBC; Models; Linearization; Methods; Impulse-Response; Functions (search for similar items in EconPapers)
Date: 1996-04
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:3975

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