To meaningfully improve the estimates of future profits cannot be realized without respecting the following principles: focus on the selection of significant variables according to the Pareto principle, construction of the problem solution on the bases of a recursive function, the case-based...

American innovation policy as expressed through intellectual property law contains a curious gap: it encourages individual research investments, but does little to facilitate cooperation among inventors, which is often a necessary precondition for innovation. This Article provides an in-depth...

In this paper we outline the Lagrangian constrained optimization method to solve complex problems subject to constraints. Firstly we summarize the Lagrangian constrained optimization routine. Secondly we outline a detailed implementation strategy. Thirdly and finally we provide example and solve...

We study optimal contracts when R\&D is outsourced to another company. We find that, when a realistic assumption holds, the optimal contract always leads in equilibrium to the lowest acceptable chance of having a successful technical innovation, given announced compensations. This assumption is...

One way of thinking about research and development is to recognise that firms are trying to solve particular design problems. We often build these design problems into our models, but are forced to oversimplify them in order to make the models solvable. The approach taken in this paper is to...

I study optimal monetary policy in a simple New Keynesian model with portfolio adjustment costs. Purchases of long-term debt by the central bank (quantitative easing; ‘QE') alter the average portfolio return and hence influence aggregate demand and inflation. The central bank chooses the...

This article presents an algorithm that extends Ljungqvist and Sargent's (2012) dynamic Stackelberg game to the case of dynamic stochastic general equilibrium models including forcing variables. Its first step is the solution of the discounted augmented linear quadratic regulator as in Hansen...

This algorithm extends Ljungqvist and Sargent (2012) algorithm of Stackelberg dynamic game to the case of dynamic stochastic general equilibrium models including exogenous forcing variables. It is based Anderson, Hansen, McGrattan, Sargent (1996) discounted augmented linear quadratic regulator....