A transparent approach to solving linear rational expectation models

C-Tier
Journal: Economica
Year: 2025
Volume: 92
Issue: 368
Pages: 1211-1230

Score contribution per author:

1.005 = (α=2.01 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper proposes a simple iterative method—time iteration—to solve linear rational expectation models. I prove that this method converges to the desired stable solution, and provide the conditions under which the solution is unique. Apart from its transparency and simplicity of implementation, the method provides a straightforward approach to solving models with less standard features, such as regime‐switching frameworks in which constraints may occasionally bind—for example, the zero lower bound.

Technical Details

RePEc Handle
repec:bla:econom:v:92:y:2025:i:368:p:1211-1230
Journal Field
General
Author Count
1
Added to Database
2026-01-29