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Wrzaczek, Stefan
Kuhn, Michael
Frankovic, Ivan
Year of Publication: 
Series/Report no.: 
ECON WPS No. 06/2019
The paper presents a transformation of a multi-stage optimal control model with random switching time to an age-structured optimal control model. Following the mathematical transformation, the advantages of the present approach, as compared to a standard backward approach, are discussed. They relate in particular to a compact and unified representation of the two stages of the model, the applicability of well-known numerical solution methods, and the illustration of state- and control dynamics. The paper closes with a simple example on a macroeconomic shock, illustrating the workings and advantages of the approach.
optimal control theory
age-structured optimal control theory
random switch
catastrophic disaster
Document Type: 
Working Paper

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