This paper discusses solution procedures for real business cycle (RBC) models. First, we show that the most often used solution methods, the linear-quadratic approximation, the Lagrange multiplier, and the Euler equation approach all lead to the same decision function. Second, we demonstrate...

SUMMARY This paper considers a class of one dimensional calculus of variations problems with monotonicity and comonotonicity constraints arising in economic and financial models where law invariant concave criteria (or law invariant convex measures of risk) are used. Existence solutions,...

This paper extends models of renewable resources to an economy with two sectors, resource extraction and production. In contrast to one sector models, we show that the optimal strategies in the single-firm model are essentially different from those in the two-player model. In the single-player...

This paper considers a class of one dimensional calculus of variations problems with monotonicity and comonotonicity constraints arising in economic and financial models where law invariant concave criteria (or law invariant convex measures of risk) are used. Existence solutions, optimality...

We analyse how progressive taxation and education subsidies affect schooling decisions when the returns to education are stochastic. We use the theory of real options to solve the problem of education choice in a dynamic stochastic model. We show that education attainment will be an increasing...

This paper extends models of renewable resources to an economy with two sectors, resource extraction and production. In contrast to one sector models, we show that the optimal strategies in the single-firm model are essentially different from those in the two-player model. In the single-player...

Deciding who should receive a mail-order catalog is among the most important decisions that mail-order-catalog firms must address. In practice, the current approach to the problem is invariably myopic: firms send catalogs to customers who they think are most likely to order from that catalog. In...

A dynamic model is developed to analyze farmers' irrigation investment and crop choice decisions under alternative water quality protection policies. The model is applied to an empirical example in the Oklahoma High Plains. The choices of crops and irrigation systems and the resulting levels of...