Solving Ramsey Problems with Nonlinear Projection Methods
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Michael T. Gapen
This paper applies nonlinear projection methods to solve Ramsey problems in a stochastic monetary economy. The presence of nonlinear distortions in the Ramsey problem requires the use of a solution procedure which captures these effects. The nonlinear projection method, even with low-order Chebyshev polynomials as employed in this paper, is able to capture a significant portion of the Jensen's inequality effects. As an example of the usefulness of nonlinear projection methods, we examine Barro's (1987, 1979) conjecture that welfare gains are available from policy smoothing with debt. Increases in the volatility of distortionary monetary policy are more than offset by declines in the volatility of distortionary labor taxes so that introduction of debt is welfare enhancing.
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Artikel in diesem Heft
- Article
- Economic Growth and Revealed Social Preference
- A Test of the Martingale Hypothesis
- Solving Ramsey Problems with Nonlinear Projection Methods
- A Note on the Hiemstra-Jones Test for Granger Non-causality
- Bayesian Analysis of a Doubly Truncated ARMA-GARCH Model
- What Causes The Forecasting Failure of Markov-Switching Models? A Monte Carlo Study
- Joint Tests for Non-linearity and Long Memory: The Case of Purchasing Power Parity
Artikel in diesem Heft
- Article
- Economic Growth and Revealed Social Preference
- A Test of the Martingale Hypothesis
- Solving Ramsey Problems with Nonlinear Projection Methods
- A Note on the Hiemstra-Jones Test for Granger Non-causality
- Bayesian Analysis of a Doubly Truncated ARMA-GARCH Model
- What Causes The Forecasting Failure of Markov-Switching Models? A Monte Carlo Study
- Joint Tests for Non-linearity and Long Memory: The Case of Purchasing Power Parity
