Solving the multi-country real business cycle model using a monomial rule galerkin method
Résumé
I propose a Galerkin projection method for solving dynamic economic models with many state variables. This method employs non-product monomial integration formulas for the computation of weighted residuals, and its computational cost therefore increases only polynomially in the model's dimensionality. I illustrate the practical implementation of the proposed algorithm by solving several specifications of the multi-country Real Business Cycle model described in Den Haan et al. [2010. Computational Suite of Models with Heterogeneous Agents: Multi-country Real Business Cycle Models, , this issue], and briefly discuss two possible routes for further improving its numerical accuracy.
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