Our analysis of macroeconomic fluctuations in the previous two chapters has developed two very incomplete pieces. In Chapter 5, we considered a full intertemporal macroeconomic model built from microeconomic foundations with explicit assumptions about the behavior of the underlying shocks. The model generated quantitative predictions about fluctuations, and is therefore an example of a quantita...

The Scarf algorithm was the Þrst practical, almost surely convergent method for computing general equilibria of competitive models. The current focus of much computational research is computing equilibrium of dynamic stochastic models. While many of these models are examples of Arrow-Debreu equilibria, Scarf’s algorithm and subsequent homotopy methods cannot be applied directly since they have ...