nep-cmp New Economics Papers
on Computational Economics
Issue of 2007‒08‒18
one paper chosen by
Stan Miles
Thompson Rivers University

  1. Computation of Equilibria in OLG Models with Many Heterogeneous Households By Sebastian Rausch; Thomas F. Rutherford

  1. By: Sebastian Rausch; Thomas F. Rutherford
    Abstract: This paper develops a decomposition algorithm by which a market economy with many households may be solved through the computation of equilibria for a sequence of representative agent economies. The paper examines local and global convergence properties of the sequential recalibration (SR) algorithm. SR is then demonstrated to efficiently solve Auerbach-Kotlikoff OLG models with a large number of heterogeneous households. We approximate equilibria in OLG models by solving a sequence of related Ramsey optimal growth problems.This approach can provide improvements in both efficiency and robustness as compared with simultaneous solution-methods.
    Keywords: Computable general equilibrium, overlapping generations, microsimulation, sequential recalibration
    JEL: C68 C81 D61 D91
    Date: 2007–06

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