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Terminal conditions in forward-looking economic models

Richard Pierse

No 1006, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: In this paper we show how the popular L-B-J algorithm for solving forward-looking economic models using Newton methods can be gen- eralised to allow for a block of terminal equations for variables that appear with a lead. The e¤ect of choosing di¤erent types of termi- nal condition is explored in a simple stochastic growth model using WinSolve, a general nonlinear model solution package.

Pages: 12 pages
Date: 2006-03
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:1006

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