Solving the Diamond–Mortensen–Pissarides model: A hybrid perturbation approach

Matthias Hänsel

Economics Letters, 2024, vol. 236, issue C

Abstract: Projection methods are deemed necessary to accurately solve various variants of the Diamond–Mortensen–Pissarides model used in business cycle research. This paper argues that hybrid perturbation, once combined with a non-linear change of variable, can provide an alternative, producing accurate solutions while retaining most of the simplicity of standard perturbation: Applying the method to the Hagedorn and Manovskii (2008) model, it delivers high accuracy and nearly identical business cycle moments as recent projection approaches.

Keywords: Numerical methods; Search frictions; Unemployment; Hybrid perturbation; Business cycles (search for similar items in EconPapers)
JEL-codes: C63 E32 J64 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524001046

DOI: 10.1016/j.econlet.2024.111621

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