Solving the real business cycles model of small-open economies by a sample-independent approach

摘要

One hallmark of small-open economy models with a time-separable preference assumption is the non-uniqueness of their steady states. Following King et al. (J. Monetary Econ. 21 (1988) 195―232), most studies compute a log-linear approximation solution to their small-open economies around the sample means of the corresponding variables. The resulting reliance of the outcome on a particular sample may lead to different implications about the business cycles properties of a small-open economy. This paper proposes a sample-independent approach to solving this kind of model and shows its superiority over a sample-dependent method through some simulation results.