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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Solving the Multi-Country Real Business Cycle Model using a Smolyak-Collocation Method |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Economic Dynamics and Control |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 0165-1889 |
| Volume | 35 |
| Number | 2 |
| Page Range | 229 - 239 |
| Date | 2010 |
| Abstract Text | We describe a sparse-grid collocation method to compute recursive solutions of dynamic economies with a sizable number of state variables. We show how powerful this method can be in applications by computing the non-linear recursive solution of an international real business cycle model with a substantial number of countries, complete insurance markets and frictions that impede frictionless international capital flows. In this economy, the aggregate state vector includes the distribution of world capital across different countries as well as the exogenous country-specific technology shocks. We use the algorithm to efficiently solve models with up to 10 countries (i.e., up to 20 continuous-valued state variables). |
| Free access at | DOI |
| Official URL | http://www.sciencedirect.com/science/article/pii/S0165188910002198 |
| Digital Object Identifier | 10.1016/j.jedc.2010.09.015 |
| Other Identification Number | merlin-id:430 |
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