Example 1: Real Business Cycle Model with Exogenous Labor
The files contained in the subdirectory \solve\ex1\ analyze a simplified version of the standard RBC model, with no labor choice for the household.
There are two main differences with respecto to the other examples:
the model is log-linearized about the steady state, instead of being linearized;
the linearization is carried on evaluating analytical derivatives, instead of computing numerical derivatives;
This example illustrates how to compute second moments by both a time and a frequency domain approach.
.m files
| main | Computes the steady state, linearizes the first order condition about the steady state, solves the model computing the feedback and the feedforward matrices, computes moments and plots impulse response functions.. |
Reference
Campbell, John Y., 1994, Inspecting the Mechanism. An Analytical Approach to the Stochastic Growth Model, Journal of Monetary Economics; 33, pages 463-506.