Perturbation Methods: Solutions

This chapter presents examples of the perturbation solutions of the canonical dynamic stochastic general equilibrium (DSGE) model introduced in Chap. 2 . Heer and Maußner provide formulas for computing the matrices of the first-, second-, and third-order approximations of the policy functions, respectively, and document their use in the computer code. At the book’s accompanying website, readers can download toolboxes written in both GAUSS and MATLAB® that implement the perturbation solution. Descriptions of these toolboxes and their uses are provided at the end of the chapter.