Article ID Journal Published Year Pages File Type
5099481 Journal of Economic Dynamics and Control 2010 13 Pages PDF
Abstract
This paper proposes an approximation to the consumption function. The approximation is based on the analytic properties of the consumption function in the buffer-stock model. In such model, the consumption function is increasing and concave and its derivative is bounded from above and below. We compare the approximation with the consumption function obtained using the endogenous grid-points algorithm and show that using the former or the latter for estimating the Euler equation leads to very similar results.
Related Topics
Physical Sciences and Engineering Mathematics Control and Optimization
Authors
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