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Numerical Simulation Of Nonoptimal Dynamic Equilibrium Models

Listed author(s):
  • ZHIGANG FENG
  • JIANJUN MIAO
  • ADRIAN PERALTA‐ALVA
  • MANUEL S. SANTOS

In this article, we propose a recursive equilibrium algorithm for the numerical simulation of nonoptimal dynamic economies. This algorithm builds upon a convergent operator over an expanded set of state variables. The fixed point of this operator defines the set of all Markovian equilibria. We study approximation properties of the operator. We also apply our recursive equilibrium algorithm to various models with heterogeneous agents, incomplete financial markets, endogenous and exogenous borrowing constraints, taxes, and money.

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File URL: http://hdl.handle.net/10.1111/iere.2014.55.issue-1
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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 55 (2014)
Issue (Month): (02)
Pages: 83-110

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Handle: RePEc:wly:iecrev:v:55:y:2014:i::p:83-110
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