this is for holding javascript data
ricardomayerb added Social Planner's problem1.tex
almost 10 years ago
Commit id: 79a069ac26d38c395e812d4a853e7c1e1b526520
deletions | additions
diff --git a/Social Planner's problem1.tex b/Social Planner's problem1.tex
new file mode 100644
index 0000000..8cf579a
--- /dev/null
+++ b/Social Planner's problem1.tex
...
\subsection{Social planner's problem}
In this paper, full information means that the agent, in addition to all parameters in his model, observes also the values of both transitory and persistent components responsible for the current and past values of productivity's growth. Partial information means that she only knows the combined values of transitory and persistent components, in addition to the stochastic system that governs productivity evolution, this implies that will use a different predictive conditional distribution for productivity when forming expectations about the future. Robustness, here, means that in addition to not been able to observe the transitory and persistent components behind productivity growth, she regards the stochastic system for productivity evolution as a mere approximation, searching for policies that work well under unspecified departures of the approximating model. This amounts to solving a penalized version of the partial information problem, where the penalization parameter is inversely related to how big of a departure from her approximating model she is willing to entertain when assessing potential realizations of the future.
\subsubsection{Full information}
Under full information, the agents maximizes , subject to , with conditional expectations of future productivity use the true values of the long run mean and persistent component.
A recursive representation is given by:
