The toolkit adapts a first-order perturbation approach and applies it in a piecewise fashion to
solve dynamic models with occasionally binding constraints. Our examples include a real …

This paper studies the potential gains of monetary and macro-prudential policies that lean
against house-price and credit cycles. We rely on a model that features Borrowers and …

Although almost nonexistent 15 years ago, there are now numerous papers that analyze
models with both aggregate uncertainty and a large number—typically a continuum—of …

A new literature studies the use of capital controls to prevent financial crises. Within this new
framework, we show that when exchange rate policy is costless, there is no need for capital …

This chapter surveys heterogeneous agent models with rational expectations that deliver a
finite number of heterogeneous agents as an equilibrium outcomes. Instead of having a …

If the links between credit markets and real economy tighten in a crisis, financial indicators
might be particularly useful in forecasting the macroeconomic outcomes associated with …

We show that limited wage flexibility in economic downturns generates strong and state-
dependent amplification of uncertainty shocks. It also explains the cyclical behaviour of …

This paper compares numerical solutions to the model of Krusell and Smith [1998. Income
and wealth heterogeneity in the macroeconomy. Journal of Political Economy 106, 867–896] …

This paper describes a method for solving heterogeneous agent models with aggregate risk
and many idiosyncratic states formulated in discrete time. It extends the method proposed by …

We survey numerical methods that are tractable in dynamic economic models with a finite,
large number of continuous state variables.(Examples of such models are new Keynesian …