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Solving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Function

Author

Listed:
  • Stephanie Schmitt-Grohe

    (Rutgers University)

  • Martin Uribe

    (University of Pennsylvania)

Abstract

This paper derives a second-order approximation to the solution of rational expectations, dynamic, general equilibrium models. To illustrate its applicability, the method is used to solve the dynamics of a simple neoclassical model. The paper closes with a brief description of a set of MATLAB programs designed to implement the method.

Suggested Citation

  • Stephanie Schmitt-Grohe & Martin Uribe, 2001. "Solving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Function," Departmental Working Papers 200106, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:200106
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    References listed on IDEAS

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    More about this item

    Keywords

    Perturbation Method; Second Order Approximation; Solving Dynamic General Equilibrium Models;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E0 - Macroeconomics and Monetary Economics - - General

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