We study the Ramsey (1928) model under the assumption that households act strategically. We compute the Markov perfect equilib- rium for this model and compare it to the original, competitive equi- librium and to a strategic open-loop equilibrium proposed by Sorger (2002, 2005b). We show that,...

A large variety of markets, such as retail markets for gasoline or mortgage markets, are characterized by a small number of firms offering a fairly homogenous product at virtually the same cost, while consumers, being uninformed about this cost, sequentially search for low prices. The present...

In this paper we study the e®ects of nonlinearities on the forecast- ing performance of a dynamic stochastic general equilibrium model. We compute ¯rst and second-order approximations to a New Keyne- sian monetary model, and use arti¯cial data to estimate the model's structural parameters...

This paper evaluates the performances of Perturbation Methods, the Parameterized Expectations Algorithm and Projection Methods in finding approximate decision rules of the basic neoclassical stochastic growth model. In contrast to the existing literature, we focus on comparing numerical methods...

We consider situations in which a principal tries to induce an agent to spend e®ort on accumulating a state variable that a®ects the well-being of both parties. The only incentive mechanism that the principal can use is a state-dependent transfer of her own utility to the agent. Formally, the...

We develop a model that incorporates salient features of growth in modern economies. We combine the expanding-variety growth model through horizontal innovations with a hierarchy of basic and applied research. The former extends the knowledge base, while the latter commercializes it. Two-way...

We consider dynamic optimization problems on one-dimensional state spaces. Un- der standard smoothness and convexity assumptions, the optimal solutions are characterized by an optimal policy function h mapping the state space into itself. There exists an extensive literature on the relation...