Nuño, Galo and Moll, Benjamin (2018) Social optima in economies with heterogeneous agents. Review of Economic Dynamics, 28. 150 - 180. ISSN 1094-2025
Full text not available from this repository.Abstract
This paper analyzes the problem of computing the social optimum in models with heterogeneous agents subject to idiosyncratic shocks. This is equivalent to a deterministic optimal control problem in which the state variable is the infinite-dimensional cross-sectional distribution. We show how, in continuous time, the problem can be broken down into two finite-dimensional partial differential equations: a dynamic programming equation and the law of motion of the distribution, and we introduce a new numerical algorithm to solve it. We illustrate this methodology with two examples: social optima in an Aiyagari economy with stochastic lifetimes and in a model of on-the-job search with learning.
| Item Type: | Article |
|---|---|
| Official URL: | https://www.sciencedirect.com/journal/review-of-ec... |
| Additional Information: | © 2017 Elsevier Inc |
| Divisions: | Economics |
| Subjects: | H Social Sciences > HB Economic Theory |
| Date Deposited: | 06 Nov 2019 14:03 |
| Last Modified: | 06 Apr 2024 22:00 |
| URI: | http://eprints.lse.ac.uk/id/eprint/102399 |
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