Woodford's Linear Quadratic method is now easy to compute.
Posted: Fri Jul 28, 2006 4:45 pmDear all:
The Linear Quadratic approximations proposed by Benigno and Woodford can now be easily computed. The analytical derivations of this methodology were thought to be time consuming. In a recent paper, this is shown to be extremely easy. The paper is available at http://papers.ssrn.com/sol3/papers.cfm? ... _id=920802. One can apply the trick proposed therein and use Dynare LQ technology. With version 4 of Dynare it will be possible to do everything inside Dynare, due to the contribution of A. Levin code (available in a message in this forum).
Best
The Linear Quadratic approximations proposed by Benigno and Woodford can now be easily computed. The analytical derivations of this methodology were thought to be time consuming. In a recent paper, this is shown to be extremely easy. The paper is available at http://papers.ssrn.com/sol3/papers.cfm? ... _id=920802. One can apply the trick proposed therein and use Dynare LQ technology. With version 4 of Dynare it will be possible to do everything inside Dynare, due to the contribution of A. Levin code (available in a message in this forum).
Best