This paper reports an attempt to implement financial factors into a neoclassical model of optimal factor demand. The theoretical shows that factor demand decisions of firms operating under monopolistic competition or with decreasing returns to scale are affected by financial restrictions. The...

We present a non-linear solution method of saddlepoint dynamics in discrete time optimization problems. It is based on the backward attractivity of the stable manifold and is very easy to implement. After an introduction to the general method we present two applications. First we consider the...