I develop a model of an R&D race in which firms learn and forget. The firm which makes a discovery first is awarded a prize. Firms compete to be the first by investing in R&D. As a by-product of its R&D effort, a firm accumulates knowledge. This knowledge stock is valuable even if success is not...

The parametric path method applies projection methods to compute the equilibrium path of economic variables in infinite-horizon dynamic models. We exploit the special structure of economic time paths common in such models. This structure drastically reduces dimensionality and reduces computing...

This paper uses an asymptotically valid expansion to derive explicitly agent's individual demand schedules and then the equilibrium allocations in options. Agents derive financial and non-tradeable income over time; they can only partially offset the latter using bonds and stocks and the option...