Set-Valued Techniques in Dynamic Economic Models

Abstract

Existence of solutions in optimization problems is usually hard to prove. Mostly, deep results from set-valued analysis are employed and convexity assumptions are imposed. In this paper we show that the theory of differential inclusions can successfully be used for solving nonconvex problems, such as nonconvex optimal control problems, or implicit differential schemes. Results are applied to a generalized dynamic input-output economic model.