Abstract
This chapter introduces two numerical methods for solving recursive dynamic optimization problems in deterministic form: the time elimination method by Mulligan and Sala-i-Martin (1991, 1993) and the backward integration method by Brunner and Strulik (2002). Both procedures involve solving for transitional dynamics backwardly from a given initial value. Both methods improve upon the common procedure known as “shooting” (e.g. Judd, 1998, Chapter 10). Various other methods are also available, but they are not discussed here.
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© 2010 Springer-Verlag New York
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Roe, T.L., Saracoğlu, D.Ş., Smith, R.B. (2010). Solution Methods in Transition Dynamics. In: Multisector Growth Models. Springer, New York, NY. https://doi.org/10.1007/978-0-387-77358-2_9
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DOI: https://doi.org/10.1007/978-0-387-77358-2_9
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Publisher Name: Springer, New York, NY
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Online ISBN: 978-0-387-77358-2
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