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Dynamic Programming in Economic Models Neoclassical Growth Model Bellman Equation. Dr. Keshab R Bhattarai Business School, University of Hull. Neo-classical Growth Model: Current Value Hamiltonian. Optimality and Boundary Conditions. Characterisation of the Balanced Growth Path.

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Dynamic Programming in Economic Models Neoclassical Growth Model Bellman Equation

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Dynamic programming in economic models neoclassical growth model bellman equation l.jpg

Dynamic Programming in Economic ModelsNeoclassical Growth ModelBellman Equation

Dr. Keshab R Bhattarai

Business School, University of Hull


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Neo-classical Growth Model: Current Value Hamiltonian

Keshab Bhattarai


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Optimality and Boundary Conditions

Keshab Bhattarai


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Characterisation of the Balanced Growth Path

Keshab Bhattarai


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Transitional Dynamics-1

Transitional Dynamics-1

Keshab Bhattarai


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Transitional Dynamics-2

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Transitional Dynamics-2

Keshab Bhattarai


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Saddle Point Solution

Keshab Bhattarai


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Brock-Mirman(1972)dynamic programming problem

Bellman’s Equations

Subject to

Value function

Keshab Bhattarai


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Solution by Iteration

First and Second Iteration of the Value function

Keshab Bhattarai


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Third Iteration of the Value function

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Fourth Iteration of the Value function

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Limits of the Value Function in Infinite Iterations

Keshab Bhattarai


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Limits of the Value Function in Infinite Iterations

Keshab Bhattarai


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References

  • Bellman, R (1957) Dynamic Programming, Princeton University Press.

  • Brock W and L Mirman (1972) Optimal Economic Growth and Uncertainty: the Discounted Case, Journal of Economic Theory 4(3):479-513.

  • Cass, D. (1965): Optimum Growth in Aggregative Model of Capital Accumulation, Review of Economic Studies, 32:233-240.

  • Ljungqvist L and T.J. Sargent (2000), Recursive Macroeconomic theory, MIT Press

  • Parente S.L.(1994) Technology Adoption, Learning-by-Doing, and Economic Growth, Journal of Economic Theory, 63, pp. 346-369.

  • Sargent TJ (1987) Dynamic Macroeconomic Theory, Chapter 1, Harvard University Press.

  • Solow, R.M. (1956) “A Contribution to the Theory of Economic Growth.” QuarterlyJournal of Economics 70, 65-94.

  • Stokey, N. L. and R.E. Lucas (1989) Recursive Methods in Economic Dynamics, Harvard UP, Cambridge, MA.

  • Uzawa, H. (1962) “On a Two-Sector Model of Economic Growth,” Review of Economic Studies 29, 40-47.

Keshab Bhattarai


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