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

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  • 1 January 2001
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      • Published in RePEc
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.

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