Deep Learning to Solve Problems with Incentive Compatibility Constraints : Application to Dynamic Public Finance

Although deep learning has received attention in many fields, application in economics is rare. Recently, Azinovic et al. (2019) applied deep learning to solve dynamic overlapping generations models and demonstrated that deep learning is a powerful tool for use in the field of economics. Motivated by this, in the present paper, deep learning is applied to dynamic public finance. Deep learning was determined to be an efficient tool to find binding incentive constraints and solve high-dimensional optimization problems