# Questions tagged [recursive-macroeconomics]

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### Eating a Cake with Uncertain Preferences

I've been playing around with a lot of cake eating problems and have been messing with how uncertainty could enter the model. One thing that I'm thinking about is whether we can solve a cake eating ...
80 views

### More than one Bellman Equation

I'm attending to my first dynamic optimization course, and what I don't fully graps yet is that sometimes we have to use more than one bellman equation. How do you realize that? I mean how do you know ...
33 views

### What is a what is meant by a “workhorse” macroeconomic model

A number of times ive seen the Neoclassical Growth Model and Overlapping Generation Model setups referred to as a "workhorse of modern macroeconomics". What does this mean exactly?
195 views

### The Cake Eating Problem with Depreciation (Modelling difficulties)

How does one go about modelling the cake eating problem with depreciation? (i.e The cake goes bad over time) The problem I have is the following. Lets define a cake eating problem sequentially as: ...
85 views

### Do policy functions exist for Finite Horizon Dynamic programming problems?

I've been looking at the cake eating problem over a finite horizion and have been trying to figure out if we can derive a policy function for such a problem. My work is written below. sequence form ...
185 views

### Dynamic programming, optimal consumption-savings (finite horizon) problem

Let $w_t$ denote a consumer's wealth at time $t$ and $c_t$, the amount she chooses to consume, so her savings exiting this time period are $w_t-c_t$. Given this savings decision, her savings $w_{t+1}$ ...
41 views

### Can the Bellman Equation be used for Finite time problems?

Its known that the Bellman equation in recursive macroeconomics is used for the following problems: $$\sum_{t=1}^\infty\beta^tU(c_t)$$ $$s.t. c_t+k_{t+1}=f(k_t)$$ $$k_0>0$$ Im wondering if we can ...
59 views

### How does one find values of constants in a value function?

Problem: suppose I have the following maximization problem: \begin{align} &\max_{(c_t)_{t \geq 0}}E_0\left[\sum^{\infty}_{t=0}\beta^{t}\ln c_t\right]\\[2mm] \text{s.t.} \quad & k_{t+1}=A^{1-\...
How do you interpret these equations $$c_{t+1}/c_t=1-\beta [(c_t/w_t)-a]$$ $$w_{t+1}+c_t =kw_t+q$$ where $\beta$ a, k, q are strictly positive parameters. $c$ is consumption and $w$ is wealth. ——...