Optimal Growth and Borrowing with Non-convex Technology

Borrowing and non-Borrowing among International Courts

Why do some international courts and judges extensively borrow from other international courts while others do not? Answers to this question have important implications for debates on transjudicial communication, the diffusion of international legal norms, and international judicial behavior. Judges may use external sources because they help improve decisions or because it fits their ideologica...

Non convex technologies and economic efficiency measure with imprecise data

Non-convex dynamic programming and optimal investment

We establish the existence of minimizers in a rather general setting of dynamic stochastic optimization without assuming either convexity or coercivity of the objective function. We apply this to prove the existence of optimal portfolios for non-concave utility maximization problems in financial market models with frictions (such as illiquidity), a first result of its kind. The proofs are based...

Optimal Consumption and Portfolio Choice with Borrowing Constraints

In this paper, we use stochastic dynamic programming to study the intertemporal consumption and portfolio choice of an infinitely lived agent who faces a constant opportunity set and a borrowing constraint. We show that, under general assumptions on the agent's utility function, optimal policies exist and can be expressed as feedback functions of current wealth. We describe these policies in de...

Optimal Lending Contracts with Long Run Borrowing Constraints

This paper discusses two ways to amend the optimal lending contract under asymmetric information studied in Clementi and Hopenhayn (2006) to change its long-run implications so that firm growth and exit driven by borrowing constraints exist in the long run. One way assumes that the entrepreneur has a lower discount factor than the bank, and the other assumes the bank has limited commitment. The...