Spooky boundaries at a distance: Inductive bias, dynamic models, and behavioural macro
Balazs Barabas
When analysing short-term dynamics in economic models, it is essential to consider long-run conditions that shape forward-looking behaviour. However, enforcing long-run boundary conditions complicates solving dynamic models, particularly high-dimensional ones. This column shows that machine learning, in particular deep learning, can satisfy these conditions without explicit enforcements, allowing for global solutions in many models of interest. It establishes this using two foundational models
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