Comparative Statics in Dynamic Programming Models with an Application to Job Search

James Albrecht, Bertil Holmlund () and Harald Lang
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Harald Lang: Research Institute of Industrial Economics (IFN)

No 172, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper presents a technique for qualitative comparative statics analysis in dynamic programming models. Let the value function v be the fixed point of a contraction mapping which depends differentially on some exogenous parameter theta. Then the derivative of v with respect to theta exists and is also the fixed point of a contraction mapping. Since this derivative is the fixed point of a contraction mapping its qualitative properties can be investigated using mathematical induction. This comparative statics methodology is illustrated with an application to a model of job search.

Keywords: Qualitative comparative statics analysis; dynamic programming; job search model (search for similar items in EconPapers)
JEL-codes: C61 J60 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1986-12, Revised 1991-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Comparative statics in dynamic programming models with an application to job search (1991)
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