The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Markov Equilibria in Macroeconomics

  • Dirk Krueger
  • Felix Kubler
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1979

Abstract

We review the recent literature in macroeconomics that analyses Markov equilibria in dynamic general equilibrium model. After defining the Markov equilibrium concept we first summarize what is known about the existence and uniqueness of such equilibria in models where sequential equilibria can be obtained by solving a suitable social planner problem. We then discuss the existence problems of Markov equilibria in models where equivalence of equilibrium allocations and solutions to social planner problems cannot be established and review techniques the literature has developed to deal with the existence problem, as well as recent applications of these techniques in macroeconomics.

Keywords

Backward induction Business cycles Commitment Convexity Dynamic programming Enforcement frictions Euler equations Existence of a Markov equilibrium Fixed-point theorems Functional equations Generalized Markov equilibria Informational frictions Lagrange multipliers Markov chains Markov equilibria in macroeconomics Markov processes Neoclassical growth theory Optimal taxation Overlapping generations models Policy functions Principle of optimality Recursive Markov equilibria Recursive techniques Reputation Sequential equilibria Social planner problem State spaces Transition functions 

JEL Classifications

D4 D10 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Dirk Krueger
    • 1
  • Felix Kubler
    • 1
  1. 1.