We construct an optimizing-agent model of a closed economy which is simple enough that we can use it to make exact utility calculations. There is a stabilization problem because there are one-period nominal contracts for wages, or prices, or both and shocks that are unknown at the time when...

In this paper, we present a novel representation of a verification result for the equilibrium control law of a general class of portfolio problems where the standard dynamic programming principle does not hold. The novel representation provides simple and easy application of the theorem and we...