Robust Comparative Statics in Large Dynamic Economies

Daron Acemoglu, Martin Kaae Jensen
2015 Journal of Political Economy  
We consider infinite-horizon economies populated by a continuum of agents subject to idiosyncratic shocks. This framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by Bewley, Aiyagari, and Huggett, models of entry, exit and industry dynamics in the spirit of Hopenhayn's work as well as dynamic models of occupational choice and search models as special cases. Robust and easy-to-apply comparative statics results are established with respect
more » ... ished with respect to exogenous parameters as well as various kinds of changes in the Markov processes governing the law of motion of the idiosyncratic shocks.
doi:10.1086/680685 fatcat:tcm34jddsjajnfodqvrvdnmxj4