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RDP 8706: Numerical Solution of Rational Expectations Models with and Without Strategic Behaviour
Equation
V(X
t
,C
3t
)
=
S
1i
X
t
+
S
2i
E
t
– X
t
′
S
3i
X
t
– 2X
t
′
S
4i
E
t
– E
t
′
S
5i
E
t
where
V
it
=
Max
Ω
i
τ
it
U
it
–
τ
it
′
Ω
2
τ
it
+
δV
it+1
(X
t+1
,C
3t+1
)
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