02118cam a22002657 4500001000600000003000500006005001700011008004100028100003000069245017000099260006600269490005100335500001800386520091200404530006101316538007201377538003601449690005601485690010101541700001901642710004201661830008601703856003701789856002601826t0282NBER20140821005135.0140821s2002 mau||||fs|||| 000 0 eng d1 aSchmitt-Grohe, Stephanie.10aSolving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Functionh[electronic resource] /cStephanie Schmitt-Grohe, Martin Uribe. aCambridge, Mass.bNational Bureau of Economic Researchc2002.1 aNBER technical working paper seriesvno. t0282 aOctober 2002.3 aThis paper derives a second-order approximation to the solution of a general class of discrete- time rational expectations models. The main theoretical contribution of the paper is to show that for any model belonging to the general class considered, the coefficients on the terms linear and quadratic in the state vector in a second-order expansion of the decision rule are independent of the volatility of the exogenous shocks. In other words, these coefficients must be the same in the stochastic and the deterministic versions of the model. Thus, up to second order, the presence of uncertainty affects only the constant term of the decision rules. In addition, the paper presents a set of MATLAB programs designed to compute the coefficients of the second-order approximation. The validity and applicability of the proposed method is illustrated by solving the dynamics of a number of model economies. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aE0 - General2Journal of Economic Literature class. 7aC63 - Computational Techniques • Simulation Modeling2Journal of Economic Literature class.1 aUribe, Martin.2 aNational Bureau of Economic Research. 0aTechnical Working Paper Series (National Bureau of Economic Research)vno. t0282.4 uhttp://www.nber.org/papers/t0282 uurn:doi:10.3386/t0282