Creator

• McGrattan, Ellen R.

Series

• Staff report (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• 164

Date Created

• 1993-10

Abstract

• Since it is the dominant paradigm of the business cycle and growth literatures, the stochastic growth model has been used to test the performance of alternative numerical methods. This paper applies the finite element method to this example. I show that the method is easy to apply and, for examples such as the stochastic growth method, gives accurate solutions within a second or two on a desktop computer. I also show how inequality constraints can be handled by redefining the optimization problem with penalty functions.

Subject (JEL)

• C63 - Computational Techniques; Simulation Modeling
• C68 - Computable General Equilibrium Models

Keyword

• Finite element method
• Growth model

Related information

• Published in: Journal of Economic Dynamics and Control (Vol 20, Num 1-3, March 1996, pp. 19-42) https://doi.org/10.1016/0165-1889(94)00842-0.

  Additional Files

  M-files and Ftools

  An earlier version of this Staff Report circulated as Working Paper 514.

Date Modified

• 10/07/2020

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Research Paper

DOI

•  https://doi.org/10.21034/sr.164

License

• Creative Commons BY-NC Attribution-NonCommercial 4.0 International

Relationships

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• Staff Reports

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