Monetary Equilibrium and the Differentiability of the Value Function

18 Pages Posted: 23 Dec 2014

See all articles by Charalambos D. Aliprantis

Charalambos D. Aliprantis

Purdue University - Krannert School of Management

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Francesco Ruscitti

John Cabot University, Department of Economics and Social Sciences

Date Written: December 22, 2014

Abstract

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 [14]. 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

Aliprantis, Charalambos D. and Camera, Gabriele and Ruscitti, Francesco, Monetary Equilibrium and the Differentiability of the Value Function (December 22, 2014). Available at SSRN: https://ssrn.com/abstract=2541962 or http://dx.doi.org/10.2139/ssrn.2541962

Charalambos D. Aliprantis

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Francesco Ruscitti

John Cabot University, Department of Economics and Social Sciences ( email )

Via della Lungara 233
Rome, 00165
Italy

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