Solving the Stochastic Growth Model by Using Quadrature Methods and Value-Function Iterations

George Tauchen ()

Journal of Business & Economic Statistics, 1990, vol. 8, issue 1, 49-51

Abstract: This article presents a solution algorithm for the capital growth model. The algorithm uses value-function iterations on a discrete state space. The quadrature method is used to set the grid for the exogenous process, and a simple equispaced scheme in logarithms is used to set the grid for the endogenous capital process. The algorithm can produce a solution to within four-digit accuracy using a state space composed of 1,800 points in total.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:8:y:1990:i:1:p:49-51

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