Alternatives to initialize the Parameterized Expectations Algorithm
In this paper we analyze the convergence properties of some standard approaches to initialize the Parameterized Expectations Algorithm. We carry out a Monte Carlo experiment to compare their performance in computational terms. We do so within the framework of the standard neoclassical growth model and of the monetary model of Cooley and Hansen (Cooley, T.F., Hansen, G., 1989. The Inflation Tax in a Real Business Cycle Model. American Economic Review 79, 733-748).
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