Solving the DMP Model Accurately

We are grateful to Hang Bai, Andrew Chen, Daniele Coen-Pirani, Steven Davis, Paul Evans, Wouter Den Haan, Lars-Alexander Kuehn, Dale Mortensen, Paulina Restrepo-Echavarria, Etienne Wasmer, Randall Wright, and other seminar participants at The Ohio State University and the 2013 North American Summer Meeting of the Econometric Society for helpful comments. Nicolas Petrosky-Nadeau thanks Stanford Institute for Economic Policy Research at Stanford University for its hospitality. The Matlab programs for the accurate projection solution are available from the authors upon request. All remaining errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.