IDEAS home Printed from https://ideas.repec.org/a/wly/jnljam/v2014y2014i1n495089.html

A General Setting and Solution of Bellman Equation in Monetary Theory

Author

Listed:
  • Xiaoli Gan
  • Wanbo Lu

Abstract

As an important tool in theoretical economics, Bellman equation is very powerful in solving optimization problems of discrete time and is frequently used in monetary theory. Because there is not a general method to solve this problem in monetary theory, it is hard to grasp the setting and solution of Bellman equation and easy to reach wrong conclusions. In this paper, we discuss the rules and problems that should be paid attention to when incorporating money into general equilibrium models. A general setting and solution of Bellman equation in monetary theory are provided. The proposed method is clear, is easy to grasp, is generalized, and always leads to the correct results.

Suggested Citation

  • Xiaoli Gan & Wanbo Lu, 2014. "A General Setting and Solution of Bellman Equation in Monetary Theory," Journal of Applied Mathematics, John Wiley & Sons, vol. 2014(1).
    • Handle: RePEc:wly:jnljam:v:2014:y:2014:i:1:n:495089
    DOI: 10.1155/2014/495089
    as

    Download full text from publisher

    File URL: https://doi.org/10.1155/2014/495089
    Download Restriction: no
    File URL: https://libkey.io/10.1155/2014/495089?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Croushore, Dean, 1993. "Money in the utility function: Functional equivalence to a shopping-time model," Journal of Macroeconomics, Elsevier, vol. 15(1), pages 175-182.
    2. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    3. Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, December.
    4. Brock, William A, 1974. "Money and Growth: The Case of Long Run Perfect Foresight," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(3), pages 750-777, October.
    5. Svensson, Lars E O, 1985. "Money and Asset Prices in a Cash-in-Advance Economy," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 919-944, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brunnermeier, Markus K. & Niepelt, Dirk, 2019. "On the equivalence of private and public money," Journal of Monetary Economics, Elsevier, vol. 106(C), pages 27-41.
    2. Elena Sinelnikova-Muryleva, 2011. "Innovations in the sphere of payments and the money demand in Russia," Research Paper Series, Gaidar Institute for Economic Policy, issue 157P.
    3. Farmer, Roger E.A., 2000. "Two New Keynesian Theories Of Sticky Prices," Macroeconomic Dynamics, Cambridge University Press, vol. 4(1), pages 74-107, March.
    4. Maxime Menuet & Alexandru Minea & Patrick Villieu, 2018. "Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 819-853, June.
    5. Marco Bassetto & Thomas J. Sargent, 2020. "Shotgun Wedding: Fiscal and Monetary Policy," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 659-690, August.
    6. Thomas J. Sargent, 1981. ""Dollarization," seignorage, and the demand for money," Working Papers 170, Federal Reserve Bank of Minneapolis.
    7. Bozhechkova Alexandra & Trunin Pavel & Sinelnikova-Muryleva Elena & Petrova Diana & Chentsov Alexander, 2018. "Building of monetary and currency markets models," Research Paper Series, Gaidar Institute for Economic Policy, issue 175P, pages 1-96.
    8. Alexander Kriwoluzky & Christian A. Stoltenberg, 2015. "Monetary Policy and the Transaction Role of Money in the US," Economic Journal, Royal Economic Society, vol. 125(587), pages 1452-1473, September.
    9. repec:spo:wpmain:info:hdl:2441/4vm8e5vhjr99cb1ekr86bivlk0 is not listed on IDEAS
    10. Duca, John V. & VanHoose, David D., 2004. "Recent developments in understanding the demand for money," Journal of Economics and Business, Elsevier, vol. 56(4), pages 247-272.
    11. Luca Sessa, 2012. "Economic (in)stability under monetary targeting," Temi di discussione (Economic working papers) 858, Bank of Italy, Economic Research and International Relations Area.
    12. Nancy L Stokey, 2019. "Means of Payment," 2019 Meeting Papers 1218, Society for Economic Dynamics.
    13. Alfredo Villca & Alejandro Torres & Carlos Esteban Posada & Hermilson Vel�squez, 2020. "Demanda de dinero en América Latina, 1996-2016: una aplicación de cointegración en datos de panel," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 85(6).
    14. Yi Wen, 2012. "Liquidity and welfare," Working Papers 2012-037, Federal Reserve Bank of St. Louis.
    15. repec:hum:wpaper:sfb649dp2005-027 is not listed on IDEAS
    16. Niepelt, Dirk, 2023. "Payments and Prices," CEPR Discussion Papers 18291, Centre for Economic Policy Research.
    17. Yi Wen, 2009. "When does heterogeneity matter?," Working Papers 2009-024, Federal Reserve Bank of St. Louis.
    18. Bernardino Adão & André C. Silva, 2021. "Government financing, inflation, and the financial sector," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(4), pages 1357-1396, June.
    19. Kurozumi, Takushi, 2006. "Determinacy and expectational stability of equilibrium in a monetary sticky-price model with Taylor rule," Journal of Monetary Economics, Elsevier, vol. 53(4), pages 827-846, May.
    20. Shi, Shouyong, 1999. "Search, inflation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 44(1), pages 81-103, August.
    21. Eswar Prasad, 2020. "New and evolving financial technologies implications for monetary policy and financial stability in Latin America," Documentos de trabajo 19463, FLAR.
    22. Antoine Le Riche & Francesco Magris, 2016. "Decreasing Transaction Costs and Endogenous Fluctuations in a Monetary Model," Economics Bulletin, AccessEcon, vol. 36(4), pages 2381-2393.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jnljam:v:2014:y:2014:i:1:n:495089. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://onlinelibrary.wiley.com/journal/4185 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.