Advanced Search
MyIDEAS: Login to save this paper or follow this series

Optimal Regime Switching and Threshold Effects. Theory and Application to a Resource Extraction Problem under Irreversibility

Contents:

Author Info

Abstract

We consider a general control problem with two types of optimal regime switch. The first one concerns technological and/or institutional regimes indexed by a finite number of discrete parameter values, and the second features ecological-like regimes relying on given threshold values for given state variables. We propose a general optimal control framework allowing to derive the first-order optimality conditions and in particular to characterize the geometry of the shadow prices at optimal switching times (if any). We apply this new optimal control material to address the problem of the optimal management of natural resources under ecological irreversibility, and with the possibility to switch to a backstop technology.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2012_-_nr_13.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1213.

as in new window
Length: 41 pages
Date of creation: 22 May 2012
Date of revision:
Handle: RePEc:aim:wpaimx:1213

Contact details of provider:
Web page: http://www.amse-aixmarseille.fr/en
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. repec:cor:louvrp:2335 is not listed on IDEAS
  2. Zampolli, Fabrizio, 2006. "Optimal monetary policy in a regime-switching economy: The response to abrupt shifts in exchange rate dynamics," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 30(9-10), pages 1527-1567.
  3. Fabien Prieur & Mabel Tidball & Cees Withagen, 2012. "Optimal Emission-Extraction Policy in a World of Scarcity and Irreversibility," OxCarre Working Papers, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford 077, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  4. Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2011. "Technological vs ecological switch and the environmental Kuznets curve," Working Papers halshs-00633024, HAL.
  5. Fabien Prieur, 2009. "The environmental Kuznets curve in a world of irreversibility," Economic Theory, Springer, Springer, vol. 40(1), pages 57-90, July.
  6. Tomiyama, Ken, 1985. "Two-stage optimal control problems and optimality conditions," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 9(3), pages 317-337, November.
  7. Boucekkine, Raouf & Saglam, Cagri & Vall Ee, Thomas, 2004. "Technology Adoption Under Embodiment: A Two-Stage Optimal Control Approach," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 8(02), pages 250-271, April.
  8. Galor, Oded, 2004. "The Demographic Transition and the Emergence of Sustained Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4714, C.E.P.R. Discussion Papers.
  9. BOUCEKKINE, Raouf & KRAWCZYK, Jacek B. & VALLEE, Thomas, . "Environmental quality versus economic performance: a dynamic game approach," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -2335, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Pommeret, Aude & Schubert, Katheline, 2009. "Abatement Technology Adoption Under Uncertainty," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 13(04), pages 493-522, September.
  11. Karp, Larry & Zhang, Jiangfeng, 2008. "Taxes Versus Quantities for a Stock Pollutant with Endogenous Abatement Costs and Asymmetric Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series, Department of Agricultural & Resource Economics, UC Berkeley qt84q0s8tb, Department of Agricultural & Resource Economics, UC Berkeley.
  12. Tahvonen, O. & Withagen, C.A.A.M., 1996. "Optimality of irreversible pollution accumulation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3107026, Tilburg University.
  13. Simone Valente, 2009. "Endogenous Growth, Backstop Technology Adoption and Optimal Jumps," CER-ETH Economics working paper series 09/104, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  14. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, Elsevier, vol. 63(2), pages 346-369, August.
  15. Makris, Miltiadis, 2001. "Necessary conditions for infinite-horizon discounted two-stage optimal control problems," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 25(12), pages 1935-1950, December.
  16. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 30(4), pages 855-74, November.
  17. Hamilton, James D., 1990. "Analysis of time series subject to changes in regime," Journal of Econometrics, Elsevier, Elsevier, vol. 45(1-2), pages 39-70.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Nævdal, Eric & Vislie, Jon, 2013. "Resource Depletion and Capital Accumulation under Catastrophic Risk: Policy Actions against Stochastic Thresholds and Stock Pollution," Memorandum, Oslo University, Department of Economics 24/2013, Oslo University, Department of Economics.
  2. Ngo Van Long & Fabien Prieur & Klarizze Puzon & Mabel Tidball, 2014. "Markov Perfect Equilibria in Differential Games with Regime Switching Strategies," CESifo Working Paper Series 4662, CESifo Group Munich.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:aim:wpaimx:1213. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yves Doazan).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.