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SOLVING LARGE-SCALE RATIONAL-EXPECTATIONS MODELS

Published online by Cambridge University Press:  02 March 2005

JESS GASPAR  and
KENNETH L. JUDD
JESS GASPAR
Affiliation:
University of Chicago
KENNETH L. JUDD
Affiliation:
Hoover Institute
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Extract

We explore alternative approaches to numerical solutions of large rational-expectations models. We discuss and compare several current alternatives, focusing on the trade-offs in accuracy, space, and speed. The models range from representative-agent models with many goods and capital stocks, to models of heterogeneous agents with complete or incomplete asset markets. The methods include perturbation and projection methods. We show that these methods are capable of analyzing moderately large models even when we use only elementary, general-purpose numerical methods.

Keywords

Rational-Expectations ModelsRepresentative AgentsHeterogeneous AgentsComputational MethodsPerturbation MethodsProjection Methods
Type
Research Article
Information
Macroeconomic Dynamics , Volume 1 , Issue 1 , January 1997 , pp. 45 - 75
Copyright
© 1997 Cambridge University Press

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