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Displaced from steady state, each economy charts its own course back — shaped by its frictions, its markets, and the regime it inhabits.
Conditional saddle paths are computed via the global nonlinear solution method of Lee (2025).
*What does your saddle look like? If you’d like to contribute a figure (or suggest a model), please get in touch.
A canonical RBC
A canonical RBC
- Exogenous: Aggregate TFP (2 states)
- State: aggregate capital K; Jump: consumption C
- Standard one-sector neoclassical growth model
Krusell and Smith (1998)
Krusell and Smith (1998)
- Exogenous: Aggregate TFP (2 states)
- Sufficient statistic: K; Jump: C
- Heterogeneous-agent incomplete-markets economy with idiosyncratic and aggregate risk
Diamond-Mortensen-Pissarides
(exogenous separation)
Diamond-Mortensen-Pissarides
(exogenous separation)
- Exogenous: Aggregate TFP (2 states)
- Axes: unemployment u (%) vs vacancy v (%)
- Search-and-matching model with exogenous separation
Diamond-Mortensen-Pissarides
(exogenous separation, many saddles)
Diamond-Mortensen-Pissarides
(exogenous separation, many saddles)
- Exogenous: Aggregate TFP (21 states)
- Axes: unemployment u (%) vs vacancy v (%)
- Search-and-matching model with exogenous separation
New Keynesian with Rotemberg pricing
New Keynesian with Rotemberg pricing
- Exogenous: Beta (2 states)
- State: lagged nominal rate i_{-1}; Jump: inflation pi
- Rotemberg sticky-price model with interest rate smoothing
New Keynesian with Rotemberg and ZLB
(Lee and Nomura, 2026)
New Keynesian with Rotemberg and ZLB
(Lee and Nomura, 2026)
- Exogenous: Beta (2 states)
- State: lagged nominal rate i_{-1}; Jump: inflation pi
- Rotemberg sticky-price model with interest rate smoothing and ZLB
Galí (2008)
Galí (2008)
- Exogenous: Beta (2 states)
- State: stateless (saddleless); Jump: inflation pi
- Textbook Rotemberg sticky-price model without interest rate smoothing
Khan and Thomas (2008)
Khan and Thomas (2008)
- Exogenous: Aggregate TFP (2 states)
- Sufficient statistic: K; Jump: C
- Heterogeneous-firm model with fixed capital adjustment costs
Production Network
(Lee and Sun, 2026)
Production Network
(Lee and Sun, 2026)
- Exogenous: Aggregate TFP (2 states)
- State: network share alpha; Jump: consumption C
- Multi-sector DSGE with endogenous input-output linkages
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