Marcet, AlbertMarimon, RamonUniversitat Pompeu Fabra. Departament d'Economia i Empresa2017-07-262017-07-261994-09-01http://hdl.handle.net/10230/453We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. Under these constraints, the corresponding maximization (sup) problems fails to have a recursive solution. Our approach consists of studying the Lagrangian. We show that, under standard assumptions, the solution to the Lagrangian is characterized by a recursive saddle point (infsup) functional equation, analogous to Bellman's equation. Our approach applies to a large class of contractual problems. As examples, we study the optimal policy in a model with intertemporal participation constraints (which arise in models of default) and intertemporal competitive constraints (which arise in Ramsey equilibria).application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPapertime inconsistencyrecursive formulationdynamic programmingramsey equilibriumparticipation constraintrecursive saddle pointsMacroeconomics and International Economicsinfo:eu-repo/semantics/openAccess