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Differentiability and comparative analysis in discrete-time infinite-horizon optimization

Authors
Journal
Journal of Economic Theory
0022-0531
Publisher
Elsevier
Publication Date
Volume
57
Issue
1
Identifiers
DOI: 10.1016/s0022-0531(05)80049-3

Abstract

In this note I consider a family of discrete-time intertemporally separable optimization problems with unbounded horizon in which the objective is parameterized by a finite dimensional vector. Under standard assumptions, I show that optimal solutions vary smoothly with the initial state and the vector of parameters. These results provide a basic framework to develop the familiar methods of comparative analysis in a dynamic setting. Likewise, the local analysis of equilibria set out by Kehoe, Levine, and Romer [ J. Econ. Theory 50 (1990), 1–21] is extended here to economies with general equilibrium dynamics.

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