This paper establishes an algorithm for the equilibrium in a stochastic continuous time economy model, on a finite time interval, including a representative agent maximizing her expected total utility of consumption, leisure, and money, and a single firm that optimally produces the consumption good and maximizes its expected total profits based on employment rate and money held. First, under the assumption of equilibrium, a link between the firm’s control problem and the representative agent’s optimal expected total utility is obtained. Then such link is exploited to establish an algorithm for equilibrium.
An Algorithm for Equilibrium in a Dynamic Stochastic Monetary Economy
CHIAROLLA, MARIA
2019-01-01
Abstract
This paper establishes an algorithm for the equilibrium in a stochastic continuous time economy model, on a finite time interval, including a representative agent maximizing her expected total utility of consumption, leisure, and money, and a single firm that optimally produces the consumption good and maximizes its expected total profits based on employment rate and money held. First, under the assumption of equilibrium, a link between the firm’s control problem and the representative agent’s optimal expected total utility is obtained. Then such link is exploited to establish an algorithm for equilibrium.File in questo prodotto:
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