Keywords: Linear Rational Expectations, Blanchard-Kahn, Saddle Point Solution.
Abstract: This paper compares the functionality, accuracy, computational efficiency, and practicalities of
alternative approaches to solving linear rational expectations models, including the procedures of
(Sims, 1996), (Anderson and Moore, 1983), (Binder and Pesaran, 1994), (King and Watson, 1998),
(Klein, 1999), and (Uhlig, 1999). While all six prcedures yield similar results for models with a
unique stationary solution, the AIM algorithm of (Anderson and Moore, 1983) provides the highest
accuracy; furthermore, this procedure exhibits significant gains in computational efficiency for
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Last update: June 14, 2006