Computation of Equilibria in OLG Models with Many Heterogeneous Households

Sebastian Rausch and Thomas F. Rutherford

No 15, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper develops a decomposition algorithm by which a market economy with many households may be solved through the computation of equilibria for a sequence of representative agent economies. The paper examines local and global convergence properties of the sequential recalibration (SR) algorithm. SR is then demonstrated to efficiently solve Auerbach-Kotlikoff OLG models with a large number of heterogeneous households. We approximate equilibria in OLG models by solving a sequence of related Ramsey optimal growth problems.This approach can provide improvements in both efficiency and robustness as compared with simultaneous solution-methods.

Keywords: Computable general equilibrium; overlapping generations; microsimulation; sequential recalibration (search for similar items in EconPapers)
JEL-codes: C68 C81 D61 D91 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Computation of Equilibria in OLG Models with Many Heterogeneous Households (2010)
Chapter: Computation of Equilibria in OLG Models with Many Heterogeneous Households (2009)
Working Paper: Computation of Equilibria in OLGModels with Many Heterogeneous Households (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:15

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