An Exercise on Discrete-Time Intertemporal Optimization
AbstractThis paper, using the different alternative methods of dynamic optimization - the Lagrange/Kuhn-Tucker (LKT) method, the substitution method, the Hamiltonian method, and the dynamic programming approach - derives the conditions that must be satisfied by the solution to the so-called Ramsey problem, hopefully in a way that can be understood by advanced undergraduate economics students. This is done by assuming that time is discrete and that, for simplicity but without loss of generality, there are only three periods.
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Bibliographic InfoPaper provided by University of the Philippines School of Economics in its series UP School of Economics Discussion Papers with number 201306.
Length: 31 pages
Date of creation: Jul 2013
Date of revision:
Publication status: Published as UPSE Discussion Paper No. 2013-06, July 2013
Ramsey problem; dynamic optimazation; Lagrange method; Substitution method; Hamiltonian method; dynamic programming;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
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