Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model
John Campbell ()
Scholarly Articles from Harvard University Department of Economics
This paper argues that a clear understanding of the stochastic growth model can best be achieved by working out an approximate analytical solution. The proposed solution method replaces the true budget constraints and Euler equations of economic agents with loglinear approximations. The model then becomes a system of loglinear expectational difference equations, which can be solved by the method of undetermined coefficients. The paper uses this technique to study shocks to techno- logy and shocks to government spending financed by lump-sum or distortionary taxation. It emphasizes that the persistence of shocks is an important determinant of their macroeconomic effects.
References: Add references at CitEc
Citations: View citations in EconPapers (190) Track citations by RSS feed
Published in Journal of Monetary Economics
Downloads: (external link)
Journal Article: Inspecting the mechanism: An analytical approach to the stochastic growth model (1994)
Working Paper: Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:3196342
Access Statistics for this paper
More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().