Fiscal stimulus as an optimal control problem

نویسندگان

چکیده

During the Great Recession, Democrats in United States argued that government spending could be utilized to “grease wheels” of economy order create wealth and increase employment; Republicans, on other hand, contended is wasteful discourages investment, thereby increasing unemployment. This past year we have found ourselves midst another crisis where fiscal stimulus again being considered as a solution. In present paper, address this question by formulating an optimal control problem generalizing model Radner Shepp (1996). The allows for company borrow continuously from government. We prove there exists strategy; rigorous verification proofs its optimality are provided. proceed loans expected value company. also examine consequences different profit-taking behaviors among firms who receive stimulus.

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ژورنال

عنوان ژورنال: Stochastic Processes and their Applications

سال: 2022

ISSN: ['1879-209X', '0304-4149']

DOI: https://doi.org/10.1016/j.spa.2021.05.009