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Checking for saddlepoint stability: An easy test

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Abstract

In this paper, we present a theoretically founded procedure in order to check for saddlepoint stability of rational expectations models. The proposed device uses some specific perturbed finite time approximations of the models and allows for an explicit theoretical foundation. Numerical evidence are presented to study the feasibility of the procedure regarding to the scales and the spectra of the models. In particular, it is shown how to apply it on nonlinear models in connection with relaxation resolution algorithms. Actually, this paper gives a theoretical basis to the heuristic sensitivity tests traditionally conducted for saddlepoint stability assessment.

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Authors and Affiliations

  1. Departamento de Economía, Universidad Carlos III de Madrid, Getafe, 28903, Madrid, Spain

    Raouf Boucekkine

  2. 142 rue du Chevaleret, CNRS and CEPREMAP, 75013, Paris, France

    Cuong Le Van

Authors
  1. Raouf Boucekkine
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  2. Cuong Le Van
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Boucekkine, R., Le Van, C. Checking for saddlepoint stability: An easy test. Comput Econ 9, 317–330 (1996). https://doi.org/10.1007/BF00119478

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  • DOI: https://doi.org/10.1007/BF00119478

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