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  • 标题:A nonlinear certainty equivalent approximation method for dynamic stochastic problems
  • 本地全文:下载
  • 作者:Cai, Yongyang ; Judd, Kenneth ; Steinbuks, Jevgenijs
  • 期刊名称:Quantitative Economics
  • 电子版ISSN:1759-7331
  • 出版年度:2017
  • 卷号:8
  • 期号:1
  • 页码:117-147
  • DOI:10.3982/QE533
  • 语种:English
  • 出版社:John Wiley & Sons, Ltd.
  • 摘要:Abstract

    This paper introduces a nonlinear certainty-equivalent approximation method for dynamic stochastic problems. We first introduce a novel, stable, and efficient method for computing the decision rules in deterministic dynamic economic problems. We use the results as nonlinear and global certainty-equivalent approximations for solutions to stochastic problems, and compare their accuracy to the common linear and local certainty-equivalent methods. Our examples demonstrate that this method can be applied to solve high-dimensional problems with up to 400 state variables with acceptable accuracy. This method can also be applied to solve problems with inequality constraints. These features make the nonlinear certainty-equivalent approximation method suitable for solving complex economic problems, where other algorithms, such as log-linearization, fail to produce a valid global approximation or are far less tractable.

  • 关键词:New Keynesian DSGE model ; competitive equilibrium ; parallel computing ; sparse grid approximation ; real business cycle model ; C61 ; C63 ; C68 ; E31 ; E52
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