A Simple and Intuitive Method to Solve Small Rational Expectations Models
Holger Strulik () and
Martin Brunner ()
Quantitative Macroeconomics Working Papers from Hamburg University, Department of Economics
We present a non-linear solution method of saddlepoint dynamics in discrete time optimization problems. It is based on the backward attractivity of the stable manifold and is very easy to implement. After an introduction to the general method we present two applications. First we consider the deterministic neoclassical growthmodel and demonstrate accuracy and stability of the method. Second we solve a basic real business cycle model.
Keywords: Saddlepoint Problems; Non-linear Dynamics; Stochastic Economic Growth (search for similar items in EconPapers)
JEL-codes: C61 C63 O40 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ham:qmwops:20106
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