Solving the Stochastic Growth Model by Using a Recursive Mapping Based on Least Squares Projection

Pamela Labadie

Journal of Business & Economic Statistics, 1990, vol. 8, issue 1, 39-40

Abstract: A method to solve a standard version of a stochastic growth model is decribed. The method uses the equilibrium first-order condition (a Euler equation) and the linear least squares projection operator to construct a recursive mapping to compute the solution. At the solution, the marginal valuation of the end-of-period state (a dual price) satisfies certain orthogonality conditions.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:8:y:1990:i:1:p:39-40

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