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Robust Comparative Statics in Large Dynamic Economies

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  • Daron Acemoglu
  • Martin Kaae Jensen

Abstract

We consider infinite-horizon economies populated by a continuum of agents subject to idiosyncratic shocks. This framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by Bewley, Aiyagari, and Huggett; models of entry, exit, and industry dynamics in the spirit of Hopenhayn's work; and dynamic models of occupational choice and search models as special cases. Robust and easy-to-apply comparative statics results are established with respect to exogenous parameters as well as various kinds of changes in the Markov processes governing the law of motion of the idiosyncratic shocks.
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Suggested Citation

  • Daron Acemoglu & Martin Kaae Jensen, 2012. "Robust Comparative Statics in Large Dynamic Economies," Levine's Working Paper Archive 786969000000000507, David K. Levine.
  • Handle: RePEc:cla:levarc:786969000000000507
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    References listed on IDEAS

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    Cited by:

    1. Konstantinos Angelopoulos & Spyridon Lazarakis & James Malley, 2017. "Wealth inequality and externalities from ex ante skill heterogeneity," Working Papers 2017_07, Business School - Economics, University of Glasgow.
    2. Pham, Ngoc-Sang, 2017. "Dividend taxation in an infinite-horizon general equilibrium model," MPRA Paper 80580, University Library of Munich, Germany.
    3. Maya Eden, 2017. "Misallocation and the Distribution of Global Volatility," American Economic Review, American Economic Association, vol. 107(2), pages 592-622, February.
    4. Jain, Sanjay & Majumdar, Sumon & Mukand, Sharun W, 2014. "Walk the line: Conflict, state capacity and the political dynamics of reform," Journal of Development Economics, Elsevier, vol. 111(C), pages 150-166.
    5. Carvalho, Vasco M & Grassi, Basile, 2015. "Large Firm Dynamics and the Business Cycle," CEPR Discussion Papers 10587, C.E.P.R. Discussion Papers.
    6. repec:oup:restud:v:85:y:2018:i:1:p:581-610. is not listed on IDEAS
    7. Camacho, Carmen & Kamihigashi, Takashi & Sağlam, Çağrı, 2018. "Robust comparative statics for non-monotone shocks in large aggregative games," Journal of Economic Theory, Elsevier, vol. 174(C), pages 288-299.
    8. Acikgoz, Omer, 2015. "On the Existence of Equilibrium in Bewley Economies with Production," MPRA Paper 69061, University Library of Munich, Germany.
    9. Acikgoz, Omer, 2015. "On the Existence and Uniqueness of Stationary Equilibrium in Bewley Economies with Production," MPRA Paper 71066, University Library of Munich, Germany, revised 30 Apr 2016.
    10. repec:eee:jetheo:v:173:y:2018:i:c:p:18-55 is not listed on IDEAS
    11. Andrew J. Monaco & Tarun Sabarwal, 2016. "Games with strategic complements and substitutes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 65-91, June.
    12. Konstantinos Angelopoulos & Spyridon Lazarakis & Jim Malley, 2017. "Wealth Inequality and Externalities from Ex Ante Skill Heterogeneity," CESifo Working Paper Series 6572, CESifo Group Munich.
    13. Martin Kaae Jensen, 2018. "Distributional Comparative Statics," Review of Economic Studies, Oxford University Press, vol. 85(1), pages 581-610.
    14. Omer Acikgoz, 2014. "Transitional Dynamics and Long-Run Optimal Taxation under Incomplete Markets," 2014 Meeting Papers 990, Society for Economic Dynamics.
    15. Daron Acemoglu & Martin Kaae Jensen, 2015. "Robust Comparative Statics in Large Dynamic Economies," Journal of Political Economy, University of Chicago Press, vol. 123(3), pages 587-640.
    16. Acikgoz, Omer, 2015. "Transitional Dynamics and Long-run Optimal Taxation Under Incomplete Markets," MPRA Paper 73380, University Library of Munich, Germany.
    17. Łukasz Balbus & Paweł Dziewulski & Kevin Reffett & Łukasz Woźny, 2015. "Differential information in large games with strategic complementarities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 201-243, May.
    18. Rene Carmona & Francois Delarue & Daniel Lacker, 2016. "Mean field games of timing and models for bank runs," Papers 1606.03709, arXiv.org, revised Jan 2017.
    19. Takashi Kamihigashi & John Stachurski, 2014. "An Axiomatic Approach to Measuring Degree of Stochastic Dominance," Discussion Paper Series DP2014-36, Research Institute for Economics & Business Administration, Kobe University.
    20. Acikgoz, Omer, 2013. "Transitional Dynamics and Long-run Optimal Taxation Under Incomplete Markets," MPRA Paper 50160, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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