Monotone Methods for Markovian Equilibrium in Dynamic Economies

Kevin Reffett (), Manjira Datta, Leonard Jay Mirman and Olivier Morand ()
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Kevin Reffett: W. P. Carey School of Business Department of Economics, http://wpcarey.asu.edu/Directory/stafffaculty.cfm?cobid=1039534

Working Papers from Department of Economics, W. P. Carey School of Business, Arizona State University

Abstract: In this paper, we provide an overview of an emerging class of "monotone map methods" in analyzing distorted equilibrium in dynamic economies. In particular, we focus on proving the existence and characterization of competitive equilibrium in nonoptimal versions of the optimal growth models. We suggest two alternative methods: an Euler equation method for a smooth, strongly concave environment, and a value function method for a non-smooth supermodular environment. We are able to extend this analysis to study models that allow for unbounded growth or a labor-leisure choice.

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Related works:
Working Paper: Monotone Methods for Markovian Equilibrium in Dynamic Economies (2002)
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