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Solving Euler equations: classical methods and the C¹ contraction mapping method revisited

In this paper we describe the classical methods used to solve the Euler equations. Special attention is devoted to the iterative method based on a contraction mapping derived from these equations in Maldonado and Moreira (2003). We test the numerical robustness of this method when it is used in models with sensitiveness to initial conditions. Finally we extend the method to the case of stochastic Euler equations.

Euler equation; numerical methods; economic dynamics


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