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Forward-Looking Decision Making:
Dynamic Programming Models Applied to Health, Risk, Employment, and Financial Stability
Robert E. Hall

Book Description | Endorsements
Chapter 1 [in PDF format]

TABLE OF CONTENTS:

Foreword vii
Preface ix

Chapter 1: Basic Analysis of Forward-Looking Decision Making 1
1.1 The Dynamic Program 1
1.2 Approximation 5
1.3 Stationary Case 6
1.4 Markov Representation 7
1.5 Distribution of the Stochastic Driving Force 9

Chapter 2: Research on Properties of Preferences 10
2.1 Research Based on Marshallian and Hicksian Labor Supply Functions 13
2.2 Risk Aversion 15
2.3 Intertemporal Substitution 17
2.4 Frisch Elasticity of Labor Supply 19
2.5 Consumption-Hours Complementarity 20

Chapter 3: Health 23
3.1 The Issues 23
3.2 Basic Facts 25
3.3 Basic Model 26
3.4 The Full Dynamic-Programming Model 31
3.5 The Health Production Function 35
3.6 Preference Parameters 36
3.7 Solving the Model 37
3.8 Concluding Remarks 38

Chapter 4: Insurance 42
4.1 The Model 43
4.2 Calibration 45
4.3 Results 46

Chapter 5: Employment 50
5.1 Insurance 52
5.2 Dynamic Labor-Market Equilibrium 53
5.3 The Employment Function 58
5.4 Econometric Model 59
5.5 Properties of the Data 64
5.6 Results 65
5.7 Concluding Remarks 69

Chapter 6: Idiosyncratic Risk 70
6.1 The Joint Distribution of Lifetime and Exit Value 73
6.2 Economic Payoffs to Entrepreneurs 74
6.3 Entrepreneurs in Aging Companies 82
6.4 Concluding Remarks 85

Chapter 7: Financial Stability with Government-Guaranteed Debt 87
7.1 Introduction 87
7.2 Options 92
7.3 Model 94
7.4 Calibration 100
7.5 Equilibrium 101
7.6 Roles of Key Parameters 113
7.7 Concluding Remarks 115
7.8 Appendix: Value Functions 116

References 119
Index 123

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File created: 11/11/2014

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