On Linear-Quadratic Approximations

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type , Preprint 01 Jan 2006 English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

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Authors: Debortoli, Davide; Nunes, Ricardo;

doi: 10.2139/ssrn.920802

On Linear-Quadratic Approximations

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Abstract

We prove the generality of the methodology proposed in Benigno and Woodford (2006). We show that, even in the presence of a distorted steady state, it is always possible and relatively simple to obtain a purely quadratic approximation to the welfare measure. We also show that, in order to do so, the timeless perspective assumption is crucial.

Related Organizations

Barcelona Graduate School of Economics
Spain
Universitat Pompeu Fabra
Spain
Federal Reserve Bank of Boston
United States

Keywords

Linear-Quadratic Approximation; Distorted Steady State; Timeless Perspective, jel: jel:C60, jel: jel:E0

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