Jump to ContentJump to Main Navigation
Recursive Models of Dynamic Linear Economies$
Users without a subscription are not able to see the full content.

Lars Peter Hansen and Thomas J. Sargent

Print publication date: 2013

Print ISBN-13: 9780691042770

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691042770.001.0001

Show Summary Details
Page of

PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 29 June 2022



(p.217) Chapter 10 Examples
Recursive Models of Dynamic Linear Economies

Lars Peter Hansen

Thomas J. Sargent

Princeton University Press

Some of the general equilibrium models in this book can be reinterpreted as partial equilibrium models that employ the notion of a representative firm, and that generalize the preference and technology specifications of Lucas and Prescott (1971). The idea is that there is a large number of identical firms that produce the same goods and sell them in competitive markets. Because they are identical, we carry along only one of these firms, and let it produce the entire output in the industry. But we have to be careful in our analysis because this representative firm's decisions play two very different roles: as a stand-in for the “average” competitive producer, and as producer of the entire industry's output. In posing its optimum problem, we want the firm to act as a price-taking competitor. This chapter first describes the links between our earlier general equilibrium formulation and a partial equilibrium. It then provides examples of models that conform to our framework models, including models of markets for housing, cattle, and occupational choice.

Keywords:   partial equilibrium models, housing, cattle, occupational choice, representative firm

Princeton Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.