# Error bounds for a numerical solution for dynamic economic models

Manuel Santos, J. Vigo

Research output: Contribution to journalArticle

8 Citations (Scopus)

### Abstract

In this paper, we analyze a discretized version of the dynamic programming algorithm for a parameterized family of infinite-horizon economic models, and derive error bounds for the approximate value and policy functions. If h is the mesh size of the discretization, then the approximation error for the value function is bounded by Mh2, and the approximation error for the policy function is bounded by Nh, where the constants M and N can be estimated from primitive data of the model.

Original language English (US) 41-45 5 Applied Mathematics Letters 9 4 https://doi.org/10.1016/0893-9659(96)00049-3 Published - Jul 1996 Yes

### Fingerprint

Economic Model
Approximation Error
Error Bounds
Dynamic Model
Numerical Solution
Economics
Infinite Horizon
Value Function
Dynamic Programming
Discretization
Mesh
Dynamic programming
Policy
Model
Family

### Keywords

• Dynamic programming
• Error bounds
• Numerical solutions
• Value and policy functions

### ASJC Scopus subject areas

• Computational Mechanics
• Control and Systems Engineering
• Applied Mathematics
• Numerical Analysis

### Cite this

In: Applied Mathematics Letters, Vol. 9, No. 4, 07.1996, p. 41-45.

Research output: Contribution to journalArticle

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