Researchers estimate two alternatives to DSGE model at ZLB

Risk modelling

In estimating zero lower bound (ZLB) constraints, a piecewise linear version of a non-linear model is an “excellent substitute” for a fully non-linear model, researchers find in a paper published by the Federal Reserve Bank of Dallas.

In the paper, Tyler Atkinson, Alexander Richter and Nathaniel Throckmorton compare the accuracy of two alternatives to linear methods for estimating ZLB constraints in a dynamic stochastic general equilibrium model. The first is a non-linear model that accounts

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