OccBin: A toolkit for solving dynamic models with occasionally binding constraints easily

The toolkit adapts a first-order perturbation approach and applies it in a piecewise fashion to solve dynamic models with occasionally binding constraints. Our examples include a real business cycle model with a constraint on the level of investment and a New Keynesian model subject to the zero lower bound on nominal interest rates. Compared with a high-quality numerical solution, the piecewise linear perturbation method can adequately capture key properties of the models we consider. A key advantage of the piecewise linear perturbation method is its applicability to models with a large number of state variables. •A piecewise linear algorithm solves models with occasionally binding constraints.•The piecewise linear solution captures key aspects of the full nonlinear solution.•A library of routines accompanies our paper.