Monotone Dynamic Programming: Director’s Cut

By integrating dynamic programming with the theory of order preserving dynamical systems (Hirsch (1982), Smith (1995)) this paper develops a new approach to stability analysis in dynamic economic models. The main results provide simple conditions on the primitives of a model which imply that steady states are globally stable for almost all initial conditions. If the steady state is unique or lattice methods are employed in their study; this completely resolves all stability questions. The methods’ applicability is demonstrated through examples from investment theory, growth theory, and renewable resource economics.