STOCHASTIC CONTROL FOR
ECONOMIC MODELS
Second Edition

STOCHASTIC CONTROL FOR
ECONOMIC MODELS
Second Edition

STOCHASTIC CONTROL FOR
ECONOMIC MODELS
Second Edition

Many problems in economics are naturally formulated as dynamic models, in
which control or policy variables are used to move a system over time from a less
desirable to a more desirable position. One example is short-run macroeconomic
problems. The controls are monetary and fiscal policy, the dynamic system is a
macroeconometric model, and the desired position is low levels of inflation and
unemployment. Another example is the problem of the firm. Here the controls are
pricing and production levels, the dynamic system is a model of production and
sales, and the desired position is high levels of profits.

David A. Kendrick