Comparing Solution Methods for Dynamic Equilibrium Economies
FRB of Atlanta Working Paper No. 2003-27
39 Pages Posted: 17 Feb 2004
Date Written: October 2003
This paper compares solution methods for dynamic equilibrium economies. The authors compute and simulate the stochastic neoclassical growth model with leisure choice using Undetermined Coefficients in levels and in logs, Finite Elements, Chebyshev Polynomials, Second and Fifth Order Perturbations and Value Function Iteration for several calibrations. The authors document the performance of the methods in terms of computing time, implementation complexity and accuracy and they present some conclusions about their preferred approaches based on the reported evidence.
Keywords: Dynamic equilibrium economies, computational methods, linear and nonlinear solution methods
JEL Classification: C63, C68, E37
Suggested Citation: Suggested Citation