Accuracy in simulations
AbstractSince the actual solution to intertemporal rational expectations models is usually not known, it is useful to have criteria for judging the accuracy of a given numerical solution. In this paper, the authors propose a test for accuracy that is easy to implement and can be applied to a wide class of models without knowledge of the exact solution. They discuss the power of the test by simulating several models with the linear-quadratic approximation and with the method of parametrized expectations. The authors conclude that the test is powerful. Copyright 1994 by The Review of Economic Studies Limited.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 42.
Date of creation: Sep 1993
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- > Schools of Economic Thought, Epistemology of Economics > Economic Methodology > Dynamic Stochastic General Equilibrium > Solution Methods for DSGE models
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