Numerical Simulation of Nonoptimal Dynamic Equilibrium Models.pdf

Research Division Federal Reserve Bank of St. Louis Working Paper Series Numerical Simulation of Nonoptimal Dynamic Equilibrium Models Zhigang Feng Jianjun Miao Adrian Peralta-Alva and Manuel S. Santosy Working Paper 2009-018C /wp/2009/2009-018.pdf April 2009 Revised February 2012 FEDERAL RESERVE BANK OF ST. LOUIS Research Division P.O. Box 442 St. Louis, MO 63166 ______________________________________________________________________________________ The views expressed are those of the individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. Federal Reserve Bank of St. Louis Working Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to Federal Reserve Bank of St. Louis Working Papers (other than an acknowledgment that the writer has had access to unpublished material) should be cleared with the author or authors. Numerical Simulation of Nonoptimal Dynamic Equilibrium Models⇤ Zhigang Feng, Jianjun Miao, Adrian Peralta-Alva, and Manuel S. Santos† Abstract In this paper we present a recursive method for the numerical simulation of non- optimal dynamic equilibrium models. This method builds upon a convergent oper