EconPapers    
Economics at your fingertips  
 

A Note on the Time-Elimination Method For Solving Recursive Dynamic Economic Models

Casey Mulligan and Xavier Sala-i-Martin

No 116, NBER Technical Working Papers from National Bureau of Economic Research, Inc

Abstract: The Time-Elimination Method for solving recursive dynamic economic models is described. By defining control-like and state-like variables, one can transform the equations of motion describing the economy's evolution through time into a system of differential equations that are independent of time. Unlike the transversality conditions, the boundary conditions for the system in the state-like variable are not asymptotic boundary conditions. In theory, this reformulation of the problem greatly facilitates numerical analysis. In practice, problems which were impossible to solve with a popular algorithm - shooting - can be solved in short order. The reader of this paper need not have any knowledge of numerical mathematics or dynamic programming or be able to draw high dimensional phase diagrams. only a familiarity with the first order conditions of the 'Hamiltonian' method for solving dynamic optimization problems is required. The most natural application of Time-Elimination is to growth models. The method is applied here to three growth models.: the Ramsey/Cass/Koopmans one sector model, Jones & Manuelli's(1990) variant of the Ramsey model, and a two sector growth model in the spirit of Lucas (1988). A very simple - but complete - computer program for numerically solving the Ramsey model is provided.

Date: 1991-11
Note: EFG
References: Add references at CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
http://www.nber.org/papers/t0116.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberte:0116

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/t0116

Access Statistics for this paper

More papers in NBER Technical Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-31
Handle: RePEc:nbr:nberte:0116