Terminal conditions in forward-looking economic models
AbstractIn 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.
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Bibliographic InfoPaper provided by School of Economics, University of Surrey in its series School of Economics Discussion Papers with number 1006.
Length: 12 pages
Date of creation: Mar 2006
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-01 (All new papers)
- NEP-CMP-2006-04-01 (Computational Economics)
- NEP-DGE-2006-04-01 (Dynamic General Equilibrium)
- NEP-MAC-2006-04-01 (Macroeconomics)
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