Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5059516 | Economics Letters | 2013 | 4 Pages |
Abstract
This note describes a simple procedure for solving the risky steady state in medium-scale macroeconomic models. This is the “point where agents choose to stay at a given date if they expect future risk and if the realization of shocks is 0 at this date” [Coeurdacier, N., Rey, H., Winant, P., 2011. The risky steady state. The American Economic Review 101 (3), 398-401]. This new procedure is a direct method which makes use of a second-order approximation of the macroeconomic model around its deterministic steady state, thus avoiding the need to employ an iterative algorithm to solve a fixed-point problem.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Oliver de Groot,