✦ LIBER ✦
The parametric path method: an alternative to Fair–Taylor and L–B–J for solving perfect foresight models
✍ Scribed by Kenneth L. Judd
- Publisher
- Elsevier Science
- Year
- 2002
- Tongue
- English
- Weight
- 206 KB
- Volume
- 26
- Category
- Article
- ISSN
- 0165-1889
No coin nor oath required. For personal study only.
✦ Synopsis
The parametric path method applies projection methods to compute the equilibrium time path of economic variables in inÿnite-horizon dynamic models. We exploit the special structure of equilibrium paths common in such models to construct a low-dimensional set of candidate solutions, and then use e cient integration and equation solution methods to ÿnd an approximate solution. Simple illustrative examples show that the parametric path method can ÿnd excellent approximations with little computational cost.