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- Title
MULTIDIMENSIONAL TRANSITIONAL DYNAMICS: A SIMPLE NUMERICAL PROCEDURE.
- Authors
TIMO TRIMBORN; KARL-JOSEF KOCH; THOMAS M. STEGER
- Abstract
We propose the relaxation algorithm as a simple and powerful method for determining the transition process in growth models numerically. This method has a number of important advantages: (1) It can easily deal with a wide range of dynamic systems including stiff differential equations and systems giving rise to a continuum of stationary equilibria. (2) The application of the procedure is fairly user-friendly. The only input required consists of the dynamic system. (3) The variant of the relaxation algorithm we propose exploits in a natural manner the infinite time horizon, which usually underlies optimal control problems in economics. As an illustrative application, we compute the transition process of the models of Jones [Jones, C.I. (1995) R&D-based models of economic growth. Journal of Political Economy103 (3), 759?784] and Lucas [Lucas, R.E., Jr. (1988) On the mechanics of economic development. Journal of Monetary Economics22, 3?42].
- Subjects
ALGORITHMS; MATHEMATICAL models of economic development; DIFFERENTIAL equations; ECONOMICS; RESEARCH &; development; ECONOMIC policy
- Publication
Macroeconomic Dynamics, 2008, Vol 12, Issue 3, p301
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100507070034