Dear all,
I would like to know what kinds of algorithm the Dynare uses to carry out first and second order approximation. What is the default setting to carry out first and second order approximation? I’ve come across the algorithm introduced by Anderson and Moore (1985) and Schmitt-Grohe and Martin Uribe (2004) (The Schur Decomposition). When I debugged some key .m files, it is discovered that AIM or Schmitt-Grohe can be used to approximate the decision up to first-order and only Schmitt-Grohe algorithm is used to approximate second-order by solving linear system. Is it true for that?
Regards,
Frank