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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 ModelsNeoclassical Growth ModelBellman Equation

Dr. Keshab R Bhattarai

Business School, University of Hull


Neo-classical Growth Model: Current Value Hamiltonian

Keshab Bhattarai


Optimality and Boundary Conditions

Keshab Bhattarai


Characterisation of the Balanced Growth Path

Keshab Bhattarai


Transitional Dynamics-1

Transitional Dynamics-1

Keshab Bhattarai


Transitional Dynamics-2

Keshab Bhattarai


Transitional Dynamics-2

Keshab Bhattarai


Saddle Point Solution

Keshab Bhattarai


Brock-Mirman(1972)dynamic programming problem

Bellman’s Equations

Subject to

Value function

Keshab Bhattarai


Solution by Iteration

First and Second Iteration of the Value function

Keshab Bhattarai


Third Iteration of the Value function

Keshab Bhattarai


Fourth Iteration of the Value function

Keshab Bhattarai


Limits of the Value Function in Infinite Iterations

Keshab Bhattarai


Limits of the Value Function in Infinite Iterations

Keshab Bhattarai


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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