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New Results in Recursive Contract Theory

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  • Ramon Marimon

    (European University Institute and UPF-BarcelonaGSE)

Abstract

Presentation of some new results showing how, under very general conditions, the recursive saddle-point method, pioneered by Marcet and Marimon, delivers the appropriate solution for contracting problems with intertemporal incentive constraints, with or without unique solutions. These results summarize work from: Marimon and Marcet "Recursive Contracts" (2011) and Marimon, Messner and Pavoni "Solving Recursive Contracts with Non-unique Solutions" (2011), as well as from ongoing work with Jan Werner: "On the Envelope Theorem without Differentiability" (2010).

Suggested Citation

  • Ramon Marimon, 2011. "New Results in Recursive Contract Theory," 2011 Meeting Papers 752, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:752
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    References listed on IDEAS

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    1. Ezra Friedman, 1998. "Risk Sharing and the Dynamics of Inequality," Discussion Papers 1235, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Albert Marcet & Ramon Marimon, 2019. "Recursive Contracts," Econometrica, Econometric Society, vol. 87(5), pages 1589-1631, September.
    3. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-1063, September.
    4. Patrick J. Kehoe & Fabrizio Perri, 2002. "International Business Cycles with Endogenous Incomplete Markets," Econometrica, Econometric Society, vol. 70(3), pages 907-928, May.
    5. Lars Ljungqvist & Thomas J. Sargent, 2004. "Recursive Macroeconomic Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026212274x, April.
    6. Narayana R. Kocherlakota, 1996. "Implications of Efficient Risk Sharing without Commitment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(4), pages 595-609.
    7. Chang, Roberto, 1998. "Credible Monetary Policy in an Infinite Horizon Model: Recursive Approaches," Journal of Economic Theory, Elsevier, vol. 81(2), pages 431-461, August.
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    Cited by:

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    2. Dennis, Richard, 2014. "Imperfect credibility and robust monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 218-234.
    3. Kwon, Hyosung & Miao, Jianjun, 2017. "Three types of robust Ramsey problems in a linear-quadratic framework," Journal of Economic Dynamics and Control, Elsevier, vol. 76(C), pages 211-231.
    4. Meradj Morteza Pouraghdam, 2016. "Three essays on the role of frictions in the economy [Trois essais sur le rôle du désaccord en économie]," SciencePo Working papers Main tel-03498781, HAL.
    5. Gouel, Christophe, 2013. "Optimal food price stabilisation policy," European Economic Review, Elsevier, vol. 57(C), pages 118-134.
    6. Lu, Yang K. & King, Robert G. & Pasten, Ernesto, 2016. "Optimal reputation building in the New Keynesian model," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 233-249.
    7. Blau, David M. & Goodstein, Ryan M., 2016. "Commitment in the household: Evidence from the effect of inheritances on the labor supply of older married couples," Labour Economics, Elsevier, vol. 42(C), pages 123-137.
    8. Jensen, Christian, 2013. "The gains from short-term commitments," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 14-23.
    9. Kam, Timothy & Stauber, Ronald, 2016. "Solving dynamic public insurance games with endogenous agent distributions: Theory and computational approximation," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 77-98.
    10. Bauducco, Sofia & Caprioli, Francesco, 2014. "Optimal fiscal policy in a small open economy with limited commitment," Journal of International Economics, Elsevier, vol. 93(2), pages 302-315.
    11. Arie, Guy, 2016. "Dynamic costs and moral hazard: A duality-based approach," Journal of Economic Theory, Elsevier, vol. 166(C), pages 1-50.
    12. Sarolta Laczo & Arpad Abraham, 2012. "Efficient Risk Sharing with Limited Commitment and Hidden Saving," 2012 Meeting Papers 680, Society for Economic Dynamics.
    13. Meradj Morteza Pouraghdam, 2016. "Three essays on the role of frictions in the economy [Trois essais sur le rôle du désaccord en économie]," SciencePo Working papers tel-03498781, HAL.

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