Dynamic Programming in Economics on a Quantum Annealer

Jesus Fernandez-Villaverde and Isaiah Hull

No 31326, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We introduce novel algorithms for solving dynamic programming problems in economics on a quantum annealer, a specialized quantum computer used for combinatorial optimization. Quantum annealers begin in a superposition of all states and generate candidate global solutions in milliseconds, regardless of problem size. In contrast to existing methods, those developed in this paper 1) recover value and policy functions, 2) avoid fundamental scaling bottlenecks, and 3) are already implementable for small (but non-trivial) problems on current hardware. We demonstrate the method by solving the real business cycle model on a quantum annealer.

JEL-codes: C63 C78 E37 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-cmp and nep-dge
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