Recursive Contracts

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Show simple item record MARCET, Albert MARIMON, Ramon 2011-04-26T10:46:38Z 2011-04-26T10:46:38Z 2011-01-01
dc.identifier.issn 1830-7728
dc.description.abstract We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization sup problems non-recursive. Our approach consists of studying a recursive Lagrangian. Under standard general conditions, there is a recursive saddle-point (infsup) functional equation (analogous to a Bellman equation) that characterizes the recursive solution to the planner's problem and forward-looking constraints. Our approach has been applied to a large class of dynamic contractual problems, such as contracts with limited enforcement, optimal policy design with implementability constraints, and dynamic political economy models. en
dc.format.mimetype application/pdf
dc.language.iso en en
dc.relation.ispartofseries EUI MWP en
dc.relation.ispartofseries 2011/03 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject Recursive methods en
dc.subject dynamic optimization en
dc.subject Ramsey equilibrium en
dc.subject time inconsistency en
dc.subject limited participation en
dc.subject contract default en
dc.subject saddle-points en
dc.subject Lagrangian multipliers en
dc.title Recursive Contracts en
dc.type Working Paper en
dc.neeo.contributor MARCET|Albert|aut|
dc.neeo.contributor MARIMON|Ramon|aut|EUI70009
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