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A contractive method for computing the stationary solution of the Euler equation

Author

Listed:
  • Humberto Moreira

    (PUC-Rio)

  • Wilfredo Maldonado

    (UFF)

Abstract

A contractive method for computing stationary solutions of intertemporal equilibrium models is provided. The method is implemented using a contraction mapping derived from the first-order conditions. The deterministic dynamic programming problem is used to illustrate the method. Some numerical examples are performed.

Suggested Citation

  • Humberto Moreira & Wilfredo Maldonado, 2003. "A contractive method for computing the stationary solution of the Euler equation," Economics Bulletin, AccessEcon, vol. 3(1), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-02c60001
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    Cited by:

    1. Maldonado, Wilfredo L. & Moreira, Humberto Luiz Ataíde, 2006. "Solving Euler Equations: Classical Methods and the C¹ Contraction Mapping Method Revisited," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 60(2), November.
    2. Arellano, Cristina & Maliar, Lilia & Maliar, Serguei & Tsyrennikov, Viktor, 2016. "Envelope condition method with an application to default risk models," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 436-459.
    3. Li, Huiyu & Stachurski, John, 2014. "Solving the income fluctuation problem with unbounded rewards," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 353-365.
    4. Marcelo de Paiva Abreu, 2003. "The political economy of economic integration in the Americas: Latin American interests," Textos para discussão 468, Department of Economics PUC-Rio (Brazil).
    5. David González-Sánchez & Onésimo Hernández-Lerma, 2014. "Dynamic Potential Games: The Discrete-Time Stochastic Case," Dynamic Games and Applications, Springer, vol. 4(3), pages 309-328, September.

    More about this item

    Keywords

    contractive method stationary solutions Euler equation;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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