Gains from second-order approximations

Matthias Paustian

No 25/2003, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: The benefit from using second-order approximations tostochastic dynamic rational expec- tations models is explained. By example of the neoclassical growth model, this note as- sesses the accuracy of the obtained approximation. The implications for optimal policy are discussed.

Keywords: Second-order approximation; accuracy; optimal policy (search for similar items in EconPapers)
JEL-codes: C63 E0 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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