Recursive Competitive Equilibrium - RCE

AAA

DEFINITION of 'Recursive Competitive Equilibrium - RCE'

An equilibrium concept associated with dynamic programs. Recursive competitive equilibrium (RCE) is characterized by time-invariant equilibrium decision rules that specify actions as a function of a limited number of state variables, which summarize the effects of past decisions and current information. Economic agents with knowledge of these state variables assess the current state of the economy. As their actions determine in part the values of the state variables in the next sequential time period, this structure is termed 'recursive'.

INVESTOPEDIA EXPLAINS 'Recursive Competitive Equilibrium - RCE'

The RCE concept is used in exploring various economic issues, including monetary and fiscal policy and business-cycle fluctuations. RCE decision rules include a number of functions, such as pricing and value.

RELATED TERMS
  1. Pareto Analysis

    A technique used for decision making based on the Pareto Principle, ...
  2. Equilibrium

    The state in which market supply and demand balance each other ...
  3. Classical Economics

    Classical economics refers to work done by a group of economists ...
  4. Neoclassical Economics

    An approach to economics that relates supply and demand to an ...
  5. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
  6. Cape Cod Method

    A method used to calculate loss reserves that uses weights proportional ...
RELATED FAQS
  1. How can individuals or businesses handle transaction costs for economic externalities?

    Externalities, also known as external economies, and transaction costs are two significant and evolving issues in contemporary ... Read Full Answer >>
  2. Why should management teams focus more on horizontal integration?

    Management teams should focus more on horizontal integrations because they allow for economies of scale, economies of scope, ... Read Full Answer >>
  3. How do externalities represent profit opportunities?

    Economic externalities expose market transactions where the full costs or benefits of economic activity are not being internalized ... Read Full Answer >>
  4. What components are factored in determining net sales?

    The key components that factor into determining net sales include revenue, sales returns, allowances and discounts. Essentially, ... Read Full Answer >>
  5. What does the rule of 70 indicate about a country's future economic growth?

    The rule of 70 could be used to indicate the approximate number of years that it would take a company's economic growth to ... Read Full Answer >>
  6. How does the Fisher effect illustrate returns on bonds?

    The Fisher effect illustrates the relationship between inflation, real interest rates and nominal interest rates by showing ... Read Full Answer >>
Related Articles
  1. Economics

    The Austrian School Of Economics

    Investopedia explains: If you think economists are only concerned with numbers, check out the Austrian School, who are more like economic philosophers.
  2. Options & Futures

    Nobel Winners Are Economic Prizes

    Before you try to profit from their theories, you should learn about the creators themselves.
  3. Economics

    The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  4. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  5. Economics

    The Importance Of Inflation And GDP

    Learn the underlying theories behind these concepts and what they can mean for your portfolio.
  6. Fundamental Analysis

    Calculating Future Value

    Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
  7. Economics

    What is Deadweight Loss?

    Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
  8. Economics

    How to Do a Cost-Benefit Analysis

    The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted.
  9. Economics

    Gaining Market Influence-- The Case of US Shale

    A convergence of sustained bank financing, falling production costs and rising oil prices might position the US shale industry for a greater market role.
  10. Economics

    The Big Chill: What’s Wrong With The U.S. Consumer

    Based on the most recent April data, investors may, once again, be disappointed when the second-quarter gross domestic product (GDP) report comes in.

You May Also Like

Hot Definitions
  1. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  2. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  3. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  4. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
Trading Center