Autori
Marimon, Ramon
Marcet, Albert

Titolo
Recursive contracts
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1998 - Fascicolo: 37 - Pagina iniziale: 1 - Pagina finale: 54

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 La-grangian. Under standard general conditions, there is a recursive saddle point (in/sup) functional equation (analogous to Bellman's equation) that characterizes the solution. Our approach applies to a large class of contractual problems, as examples, we study the optimal policies in a model intertemporal participation (default) constraints and a model with competitive constraints (as in Ramsey problems).



Testo completo: http://www.iue.it/ECO/WP-Texts/ECO98-37.pdf

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