Problems in the Numerical Simulation of Models with Heterogeneous Agents and Economic Distortions

Adrian Peralta - Alva and Manuel Santos
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Adrian Peralta - Alva: Research Division, Federal Reserve Bank of Saint Louis
Authors registered in the RePEc Author Service: Adrian Peralta-Alva ()

No 2010-14, Working Papers from University of Miami, Department of Economics

Abstract: Our work has been concerned with the numerical simulation of dynamic economies with heterogeneous agents and economic distortions. Recent research has drawn attention to inherent difficulties in the computation of competitive equilibria for these economies: A continuous Markovian solution may fail to exist, and some commonly used numerical algorithms may not deliver accurate approximations. We consider a reliable algorithm set forth in Feng et al. (2009), and discuss problems related to the existence and computation of Markovian equilibria, as well as convergence and accuracy properties. We offer new insights into numerical simulation.

Keywords: Heterogeneous agents; taxes; externalities; financial frictions; competitive equilibrium; computation; simulation. (search for similar items in EconPapers)
JEL-codes: C6 D5 E2 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2009
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Related works:
Journal Article: Problems in the Numerical Simulation of Models with Heterogeneous Agents and Economic Distortions (2010)
Working Paper: Problems in the numerical simulation of models with heterogeneous agents and economic distortions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:mia:wpaper:2010-14

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