This paper studies a value function iteration algorithm based on nonexpansive function approximation and Monte Carlo integration that can be applied to almost all stationary dynamic programming problems. The method can be represented using a randomized fitted Bellman operator and a corresponding...

In a general equilibrium model of the world economy, we develop a two-dimensional energy balance climate model featuring heat diffusion and anthropogenic forcing driven by global fossil fuel use across the sphere of the Earth. This introduces an endogenous location dependent temperature...

We study the effect of environmental risk on the extraction of a common resource. Using a dynamic and non-cooperative game in which an environmental event impacts the renewability and the quality of the resource, we show that the anticipation of such an event has an ambiguous effect on...

Empirical and experimental evidence documents that money illusion is persistent and widespread. This paper incorporates money illusion into a stochastic continuous-time monetary model of endogenous growth. We model an agent's money illusion behavior by assuming that he maximizes nonstandard...

This paper considers socially optimal government policies in a dynastic family model with physical capital, human capital, endogenous fertility and positive spillovers from average human capital. Such spillovers reduce human capital investment but raise fertility from their social optimum. We...

Previous literature demonstrates that in a standard life cycle model the optimal tax on capital is large. This paper highlights that after changing two assumptions in the standard model the optimal tax drops by almost half. First, the utility function is altered such that it implies that an...

This study examines whether central bank transparency about views of future productivity growth contributes to stabilizing macroeconomic fluctuations. In a standard New Keynesian model, the central bank and private agents make their subjective estimates on the persistence of productivity growth....

This paper analyses the potentially defensive behaviour of patent-race winners and the ensuing effect on aggregate R&D effort. We propose a quality-ladder model where leaders strategically acquire a technology advantage and are able to innovate. In this context, product-market regulation, by...

This paper develops a trade model with firm-specific quality heterogeneity in markets where firms face the threat of imitation and engage in limit-pricing strategies. Firms producing high-quality (high-price) products export, whereas firms producing lower-quality (lower-price) products serve the...

Assuming the loss aversion framework of Tversky and Kahneman (1992), stochastic investment and labour income processes, and a path-dependent fund target, we show that the optimal investment strategy for defined contribution pension plan members is a target-driven ‘threshold’ strategy,...