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Use of the Euler equations to estimate consumption appears to have advantages over traditional models. First, using Euler equations is simpler than conventional methods. This avoids the need to solve the consumer's optimization problem and is the most appealing element of using Euler equations to some economists. [4]
The Keynes–Ramsey rule is named after Frank P. Ramsey, who derived it in 1928, [3] and his mentor John Maynard Keynes, who provided an economic interpretation. [4] Mathematically, the Keynes–Ramsey rule is a necessary first-order condition for an optimal control problem, also known as an Euler–Lagrange equation. [5]
Koopmans claims in his main result that the Euler equations are both necessary and sufficient to characterize optimal trajectories in the model because any solutions to the Euler equations that do not converge to the optimal steady-state would hit either a zero consumption or zero capital boundary in finite time.
Consumption smoothing is an economic concept for the practice of optimizing a person's standard of living through an appropriate balance between savings and consumption over time. An optimal consumption rate should be relatively similar at each stage of a person's life rather than fluctuate wildly.
Economics; Population dynamics; ... The backward Euler method is an implicit method, meaning that the formula for the backward Euler method has + on both sides, so ...
New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. ... (household's Euler equation). ...
The formula is still valid if x is a complex number, and is also called Euler's formula in this more general case. [1] Euler's formula is ubiquitous in mathematics, physics, chemistry, and engineering. The physicist Richard Feynman called the equation "our jewel" and "the most remarkable formula in mathematics". [2]
Euler's identity therefore states that the limit, as n approaches infinity, of (+) is equal to −1. This limit is illustrated in the animation to the right. Euler's formula for a general angle. Euler's identity is a special case of Euler's formula, which states that for any real number x,