diff --git a/Code/TwoFirmVariation.wxmx b/Code/TwoFirmVariation.wxmx new file mode 100644 index 0000000..ae0e223 Binary files /dev/null and b/Code/TwoFirmVariation.wxmx differ diff --git a/CurrentWriting/sections/04_ConstellationOperator.tex b/CurrentWriting/sections/04_ConstellationOperator.tex index d05a5d9..b8c2672 100644 --- a/CurrentWriting/sections/04_ConstellationOperator.tex +++ b/CurrentWriting/sections/04_ConstellationOperator.tex @@ -56,7 +56,7 @@ First, find the single optimality condition \cdot \nabla_{x^i_t} [ \vec s_{t+1}, \vec x^{\sim i}_{t+1}, D_{t+1} ] \right] \label{EQ:OptimalityCondition}\\ - 0 =& -\der{F}{x^i_t}{} + \beta \nabla V^i_t \cdot \vec a_t + 0 =& -\der{F}{x^i_t}{} + \beta \nabla V^i_{t+1} \cdot \vec a_t \label{EQ:SimplifiedOptimalityCondition} \end{align} @@ -92,7 +92,7 @@ is a $2N \times 2N$ matrix of first derivatives. By solving for $\vec V^i_{t+1}$ as a function of $\vec V^i_{t}$ we get the intertemporal condition: \begin{align} - \frac{1}{\beta} A^{-1} \left(\nabla \vec V^i_t - \vec u^i \right) + \frac{1}{\beta} A^{-1} \left(\nabla \vec V^i_t - \vec u^i_t \right) = \nabla \vec V^i_{t+1} \end{align} Thus one crucial condition for the existence of a solution is that $A^{-1}$ exists for diff --git a/CurrentWriting/sections/05_SocialPlanner.tex b/CurrentWriting/sections/05_SocialPlanner.tex index c105ea1..c6cf8d9 100644 --- a/CurrentWriting/sections/05_SocialPlanner.tex +++ b/CurrentWriting/sections/05_SocialPlanner.tex @@ -14,18 +14,21 @@ The Social (Fleet) Planner's problem can be written in the belman form as: + \Gamma \sum^N_{i=1} x^i_t \end{align} -The resulting $N$ optimality conditions are: +\subsubsection{Euler Equation} +First find the $N$ optimality conditions: \begin{align} - 0 =& -\der{F(x^i_t)}{s^i_t}{} + 0 =& -\der{F(x^i_t)}{x^i_t}{} + \beta \left[ \nabla_{\vec s_{t+1}, D_{t+1}} W(\vec s_{t+1}, D_{t+1}) \cdot - \nabla_{\vec s_{t}, D_{t}}[\vec s_{t+1} ~ D_{t+1}] + \parder{}{x^I_t}{}[\vec s_{t+1} ~ D_{t+1}] \right] - ~~\forall~~i \\ + ~~\forall~~i +\end{align} +Which in vector form is: +\begin{align} 0 =& -\vec f +\beta \left[B\cdot \nabla W_{t+1} \right] \end{align} - And the $N+1$ envelope conditions are: \begin{align} \nabla_{\vec s_{t}, D_{t}} W(\vec s_t, D_t) =& @@ -37,5 +40,10 @@ And the $N+1$ envelope conditions are: \right] \\ \nabla W_t =& \vec U + \beta \left[C \cdot \nabla W_{t+1} \right] \end{align} +Which gives us the iteration format +\begin{align} + \nabla W_{t+1} =& (\beta C)^{-1} \cdot \left(\nabla W_t - \vec U \right) +\end{align} + \end{document}