Solving Monetary (MIU) models with Linearized Euler Equations: Method of Undetermined Coefficients

Fakhrehosseini, S.F.; Kaviani, Meysam

doi:10.22105/riej.2017.94115.1005

Solving Monetary (MIU) models with Linearized Euler Equations: Method of Undetermined Coefficients

Document Type: Research Paper

Authors

S.F. Fakhrehosseini ¹
Meysam kaviani ²

¹ Department of Business Management, Tonekabon Branch, Islamic Azad University, Iran

² Department of Management, Aliabad katoul branch, Islamic Azad University, Iran

10.22105/riej.2017.94115.1005

Abstract

This paper attempts to solve a benchmark money in utility model by first order Taylor approximation to the policy function. After a brief summary of recent development in first order Taylor approximation in solving dynamic stochastic general equilibrium models, we choose Sidrauski’s Money in utility model as a standard model and follow the approach proposed by Uhlig [1] to solve for the recursive law of motion at first order.

Keywords