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Solutions Manual for
Recursive Methods
in Economic Dynamics
Claudio Irigoyen
Esteban Rossi-Hansberg
Mark L. J. Wright
Harvard


1 Introduction 1
2 An Overview 3
3 Mathematical Preliminaries 20
4 Dynamic Programming under Certainty 43
5 Applications of Dynamic Programming under Certainty 56
6 Deterministic Dynamics 85
7 Measure Theory and Integration 102
8 Markov Processes 137
9 Stochastic Dynamic Programming 154
10 Applications of Stochastic Dynamic Programming 179
11 Strong Convergence of Markov Processes 199
12 Weak Convergence of Markov Processes 208
13 Applications of Convergence Results for Markov Processes 223
14 Laws of Large Numbers 246
15 Pareto Optima and Competitive Equilibria 252
vi
vii
16 Applications of Equilibrium Theory 266
17 Fixed-Point Arguments 284
18 Equilibria in Systems with Distortions 298Solutions Manual for

Recursive Methods in Economic Dynamics

Solutions Manual for

Recursive Methods in Economic Dynamics

Claudio Irigoyen Esteban Rossi-Hansberg Mark L. J. Wright

Harvard University Press
Cambridge, Massachusetts, and London, England 2002

c Copyright ¡Æ 2002 by the President and Fellows of Harvard College All rights reserved Printed in the United States of America Library of Congress Cataloging-in-Publication Data

To Marta, Santiago, and Federico ? CI To Maria Jose ? ERH To Christine ? MLJW

Contents

1 Introduction 2 An Overview 3 Mathematical Preliminaries 4 Dynamic Programming under Certainty 5 Applications of Dynamic Programming under Certainty 6 Deterministic Dynamics 7 Measure Theory and Integration 8 Markov Processes 9 Stochastic Dynamic Programming 10 Applications of Stochastic Dynamic Programming 11 Strong Convergence of Markov Processes 12 Weak Convergence of Markov Processes 13 Applications of Convergence Results for Markov Processes



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