A Further Exploration of Some Computational Issues in Equilibrium Business Cycle Theory: Discussion Paper No. 136
Lahiri, Radhika (2003) A Further Exploration of Some Computational Issues in Equilibrium Business Cycle Theory: Discussion Paper No. 136. [Working Paper] (Unpublished)
This paper revisits some of the issues involved in the comparison of alternative computational procedures within the context of a dynamic stochastic general equilibrium model. The framework in question is a more general one, in which a “standard‿ or relatively simple model is nested as a special case. Results of numerical experiments suggest that different computational methods may be used interchangeably in the case of the standard model, but not in the case of the more general model. Varying a preference parameter allows us to compare what happens to solutions using alternative procedures as one moves away from the special case to the more general framework. On the basis of the numerical experiments conducted, we find that not only do differences in solutions become larger, but answers to several economic issues of interest can yield qualitatively different answers depending on the solution method used. Examples of such issues include how second moment features change as one varies the parameters of a model, and the relative contribution of different types of stochastic shocks to fluctuations in variables.
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|Item Type:||Working Paper|
|Keywords:||Equilibrium Business Cycle Theory|
|Subjects:||Australian and New Zealand Standard Research Classification > ECONOMICS (140000)|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School|
|Copyright Owner:||Copyright 2003 (please consult author)|
|Deposited On:||25 Aug 2004|
|Last Modified:||05 Jan 2011 13:23|
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