The top journal Econometrica has published a paper on "Recursive Contracts" by Albert Marcet (UCL and BSE) and Ramon Marimon (EUI, UPF and BSE).
In the paper, Marcet and Marimon obtain a recursive formulation for a general class of optimization problems with forward‐looking constraints which often arise in economic dynamic models, for example, in contracting problems with incentive constraints or in models of optimal policy. Their approach is applicable to characterizing and computing solutions to a large class of dynamic contracting problems.
