A Correspondance-Theoretic Approach to Dynamic Optimization
Macroeconomic Dynamics, 13 (Supplement 1), 2009, 97–117.
21 Pages Posted: 23 Dec 2014
Date Written: December 22, 2014
This paper introduces a method of optimization in infinite-horizon economies based on the theory of correspondences. The proposed approach allow us to study time-separable and non-time-separable dynamic economic models without resorting to fixed point theorems or transversality conditions. When our technique is applied to the standard time-separable model it provides an alternative and straightforward way to derive the common recursive formulation of these models by means of Bellman equations.
Keywords: Optimal Plans, Policy Function, Value Function
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