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Title:Multi-dimensional transitional dynamics: a simple numberical procedure PDF Logo
Authors:Trimborn, Timo
Koch, Karl-Josef
Steger, Thomas M.
Issue Date:2006
Series/Report no.:CESifo working paper 1745
Abstract:We propose the relaxation algorithm as a simple and powerful method for simulating the transition process in growth models. This method has a number of important advantages: (1) It can easily deal with a wide range of dynamic systems including stiff differential equations and systems giving rise to a continuum of stationary equilibria. (2) The application of the procedure is fairly user friendly. The only input required consists of the dynamic system. (3) The variant of the relaxation algorithm we propose exploits in a natural manner the infinite time horizon, which usually underlies optimal control problems in economics. As an illustrative application, we simulate the transition process of the Jones (1995) and the Lucas (1988) model.
JEL:C61
C63
O40
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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