Recursive Contracts

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dc.contributor.author MARCET, Albert
dc.contributor.author MARIMON, Ramon
dc.date.accessioned 2011-04-26T10:46:38Z
dc.date.available 2011-04-26T10:46:38Z
dc.date.issued 2011-01-01
dc.identifier.issn 1830-7728
dc.identifier.uri http://hdl.handle.net/1814/16815
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.language.iso en en
dc.relation.ispartofseries EUI MWP en
dc.relation.ispartofseries 2011/03 en
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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