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  • 标题:How well-behaved are higher-order perturbation solutions?
  • 本地全文:下载
  • 作者:Wouter J. den Haan ; Joris de Wind
  • 期刊名称:DNB Working Papers / De Nederlandsche Bank
  • 出版年度:2010
  • 卷号:1
  • 出版社:De Nederlandsche Bank
  • 摘要:They are not well-behaved. The main problem is that one cannot control the radius of convergence when using perturbation techniques. Just outside the radius of convergence, higher-order approximations can easily behave extremely badly, and even within the radius of convergence one can expect higher- but finite-order perturbation solutions to display problematic oscillations. In contrast, with projection methods one can control the radius of convergence. Pruning, the solution proposed to deal with explosive behavior of higher-order perturbation solutions, is shown to be highly distortionary. A simple alternative based on short samples and rejection sampling is proposed and shown to be much less distortive.
  • 关键词:numerical solutions, perturbations, penalty functions, borrowing constraints. JEL Classification: C63, D52.
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