Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 172: Comparative Statics in Dynamic Programming Models with an Application to Job Search

James W. Albrecht , Bertil Holmlund and Harald Lang
Additional contact information
James W. Albrecht: Georgetown University
Bertil Holmlund: Uppsala University
Harald Lang: Research Institute of Industrial Economics (IFN)

Abstract: This paper presents a technique for qualitative comparative statics analysis in dynamic programming models. Let the value function v be the fixed point of a contraction mapping which depends differentially on some exogenous parameter theta. Then the derivative of v with respect to theta exists and is also the fixed point of a contraction mapping. Since this derivative is the fixed point of a contraction mapping its qualitative properties can be investigated using mathematical induction. This comparative statics methodology is illustrated with an application to a model of job search.

Keywords: Qualitative comparative statics analysis; dynamic programming; job search model

JEL-codes: C61; J60

21 pages, First version: December 1986. Revised: August 1991.

Full text files

wp172.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:34:15.