Simulating a Simple Real Business Cycle Model using Excel

⎡ q22−11Q =⎢− qq⎢11q22− q12q21⎢⎣0and⎡λ10 0 ⎤⎢−1M0= Q 0 λ20⎥Q⎢ ⎥⎢⎣0 0 λ ⎥3 ⎦.⎤⎥⎥⎥⎦,By pre-multiplying both sides of (10) by Q –1 , and by putting1⎡x⎤t ⎡cˆt ⎤⎢ 2 ⎥ −1≡⎢ ⎥ ,⎢xt⎥ Q kˆ⎢t⎥⎢3⎥⎣x⎦⎢⎣⎥tzˆt ⎦we obtain1⎡x⎤t ⎡λ10⎢ 2 ⎥=⎢⎢xt⎥ 0 λ⎢2⎢3⎥⎣x⎦⎢t ⎣ 0 0Taking the expected value of both sides evaluated at theend of period t,1⎡x⎤t ⎡λ1⎢ 2 ⎥=⎢⎢xt⎥ 0⎢⎢3⎥⎣x⎦⎢t ⎣ 0It follows that for each T>0,shown that ⎢λ 1 ⎢