This paper introduces sector-specific externalities in the Heckscher–Ohlin twocountry dynamic general equilibrium model to show that indeterminacy of the equilibrium path in the world market can occur. Under certain conditions in terms of factor intensities, there are multiple equilibrium paths from the same initial distribution of capital in the world market, and the distribution of capital in...

Abstract. In this paper, we formulate a general time-inconsistent stochastic linear–quadratic (LQ) control problem. The time-inconsistency arises from the presence of a quadratic term of the expected state as well as a state-dependent term in the objective functional. We define an equilibrium, instead of optimal, solution within the class of open-loop controls, and derive a sufficient condition...

We estimate a dynamic general equilibrium model of the U.S. economy that includes an explicit household production sector and stochastic scal variables. We use our estimates to investigate two issues. First, we analyze how well the model accounts for aggregate uctuations. We nd that household production has a signi cant impact and reject a nested speci cation in which changes in the home produc...

Social capital plays a role in many desirable economic outcomes. We analyze how these beneficial effects translate into the performance of economies by developing dynamic stochastic general equilibrium (DSGE) model featuring social explaining Solow residual. then simulate and estimate with Bayesian techniques using Italian data. Our framework fits actual data better than standard DSGE model, su...

We present an application of the theory of stochastic processes to model and categorize non-equilibrium physical phenomena. The concepts of uniformly continuous probability measures and modular evolution lead to a systematic hierarchical structure for (physical) correlation functions and non-equilibrium thermodynamical potentials. It is proposed that macroscopic evolution equations (such as dyn...

This paper proposes a model that emphasizes housing market interactions and …nancial intermediation costs to explain relative consumption volatility di¤erences between developed and emerging countries. The model improves upon existing dynamic stochastic general equilibrium (DSGE) models by incorporating a non-trivial …nancial sector and by letting both households and …rms face borrowing constra...

This paper aims at explaining the dynamics of labor markets in Spain, especially the high persistence of unemployment and the Beveridge curve. We build a stochastic dynamic general equilibrium matching model, which assumes failures in the matching between vacancies and unemployed. We calibrate the model for the Spanish economy and simulate it considering two sources of exogenous shocks: a techn...

Traditional computable general equilibrium (CGE) models have ignored uncertainty ─ even when applied to fields such as environmental modeling that are replete with economic uncertainty. In contrast, many control theory models have focused on the effects of uncertainty. Thus marrying the tradition of CGE and control modeling can result in pricequantity models with explicit dynamics and careful t...