Monetary Equilibrium and the Differentiability of the Value Function
18 Pages Posted: 23 Dec 2014
Date Written: December 22, 2014
In this study we offer a new approach to proving the differentiability of the value function, which complements and extends the literature on dynamic programming. This result is then applied to the analysis of equilibrium in the recent class of monetary economies developed in . For this type of environments we demonstrate that the value function is differentiable and this guarantees that the marginal value of money balances is well defined.
Keywords: value function, optimal plans, money
JEL Classification: E00, C61
Suggested Citation: Suggested Citation