This note provides a simple proof of the necessity of the transversality condition for the differentiable reduced-form model. The proof uses only an elementary perturbation argument without relying on dynamic programming. The proof makes it clear that, contrary to common belief, the necessity of...

This paper establishes (i) an extension of Michel's (1990, Theorem 1) necessity result to an abstract reduced-form model, (ii) a generalization of the results of Weitzman (1973) and Ekeland and Scheinkman (1986), and (iii) a new result that is useful particularly in the case of homogeneous...

This paper shows stochastic versions of (i) Michel's (1990, Econometrica 58, 705--723, Theorem 1) necessity result , (ii) a generalization of the TVC results of Weitzman (1973, Manage. Sci. 19, 783--789) and Ekeland and Scheinkman (1986, Math. Oper. Res. 11, 216--229), and (iii) Kamihigashi's...

This paper studies a one-sector stochastic optimal growth model with i.i.d. productivity shocks in which utility is allowed to be bounded or unbounded, the shocks are allowed to be bounded or unbounded, and the production function is not required to satisfy the Inada conditions at zero and...

This paper presents a new mixing condition for dynamic economies with a Markov structure. The mixing condition is stated in terms of order, and generalizes a number of wellknown conditions used to establish stability of monotone dynamic models. By generalizing the key insights of the original...

Production takes time, and labor supply and profit maximization decisions that relate to current production are typically made before all shocks affecting that production have been realized. In this paper we re-examine the problem of stochastic optimal growth with aggregate risk where the timing...

In equilibrium models of firm dynamics, the stationary equilibrium distribution of firms summarizes the predictions of the model for a given set of primitives. Focusing on Hopenhayn's seminal model of firm dynamics with entry and exit (Econometrica, 60:5, 1992, p.~1127--1150), we provide an...