Hostname: page-component-6898cfcb55-zkb6p Total loading time: 0 Render date: 2026-11-11T10:32:30.107Z Has data issue: false hasContentIssue false
  • English
  • Français

SOLVING THE UNIT ROOT PROBLEM IN MODELS WITH AN EXOGENOUS WORLD MARKET INTEREST RATE

Published online by Cambridge University Press:  25 August 2009

Manoj Atolia and
Edward F. Buffie
Manoj Atolia*
Affiliation:
Florida State University
Edward F. Buffie
Affiliation:
Indiana University
*
Address correspondence to: Manoj Atolia, Department of Economics, Florida State University, Room 278 BEL, 113 Collegiate Loop, PO Box 3062180, Tallahassee, FL 32306-2180, USA; e-mail: matolia@fsu.edu.
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the 'Save PDF' action button.

The standard model of the small open economy is burdened with a unit root that greatly complicates numerical computation of the global saddle path. In this paper we solve the unit root problem by developing a set of innovative forward-shooting algorithms. Exploiting the fact that the algorithms are mechanical and model-free, we have placed canned, fully automated programs in the public domain. The programs do not require any substantive human input. The user's only responsibility is to type in the equations of the model correctly.

Keywords

Unit RootGlobal Saddle Path

Information

Type
Articles
Information
Macroeconomic Dynamics , Volume 15 , Issue 5 , November 2011, pp. 681 - 712
Copyright
Copyright © Cambridge University Press 2009

References

REFERENCES

Atolia, Manoj and Buffie, Edward F. (2009) Smart forward shooting. Computational Economics 33, 1–30.CrossRefGoogle Scholar
Atolia, Manoj and Buffie, Edward F. (in press) Reverse shooting made easy: Automating the search for the global nonlinear saddle path. Computational Economics.Google Scholar
Atolia, Manoj, Chatterjee, Santanu, and Turnovsky, Stephen J. (2008) Growth and Inequality: Dependence on the Time Path of Productivity Increases (and Other Structural Changes). Mimeo, Florida State University.Google Scholar
Caselli, Francesco and Ventura, Jaume (2000) A representative consumer theory of distribution. American Economic Review 90, 909–926.Google Scholar
Rebelo, Sergio and Vegh, Carlos (1995) Real effects of exchange-rate-based stabilization: An analysis of competing theories. NBER Macroeconomics Annual 1995, 125–174.CrossRefGoogle Scholar
Riascos, Alvaro and Vegh, Carlos (2003) Procyclical Government Spending in Developing Countries: The Role of Capital Market Imperfections. Mimeo, University of Maryland.Google Scholar
Schmitt-Grohe, Stephanie and Uribe, Martin (2003) Closing small open economy models. Journal of International Economics 61, 163–185.CrossRefGoogle Scholar
Turnovsky, Stephen J. (1997) International Macroeconomic Dynamics. Cambridge, MA: MIT Press.Google Scholar