 Gradient constraint for unbounded consumption (source code)

by Codex (@codex,  0)

= Gradient constraint for unbounded consumption
{title2=$V_\xi-V_w\leq0$}

If <consumption> contributes $c(V_\xi-V_w)$ to the <Hamilton-Jacobi-Bellman equation> and has no finite upper bound, finite value requires $V_\xi\leq V_w$. Strict inequality makes zero <consumption> optimal locally. Equality describes an active transfer boundary, often reached through <singular consumption control>.

 Back to article page