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. Precedent Transaction Analysis

    A valuation method in which the prices paid for similar companies ...
RELATED FAQS
  1. What are common concepts and techniques of managerial accounting?

    The common concepts and techniques of managerial accounting are all the concepts and techniques that surround planning and ... Read Full Answer >>
  2. How is abatement cost accounted for on financial statements?

    Abatement costs are accounted for on a company's financial statements through increases in either cost of goods sold or operational ... Read Full Answer >>
  3. According to the neoclassical growth theory, what factors influence the growth of ...

    The neoclassical growth theory builds five major variables into its time-sensitive production formula. The first is total ... Read Full Answer >>
  4. What are the advantages and disadvantages of a wage price spiral?

    The wage price spiral, also known as a kind of cost-push inflation, was a popular economic theory between 1940 and 1975 to ... Read Full Answer >>
  5. What are the advantages and disadvantages of capitalizing interest for tax purposes?

    The advantages and disadvantages of capitalizing interest for tax purposes lie in a company's ability to manage or manipulate ... Read Full Answer >>
  6. What are the advantages of a limited government in connection with a capitalist economy?

    Economic markets are efficient to the extent that the effects of transactions are clearly understood and the prices of goods ... 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. Economics

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  7. Economics

    Calculating Income Elasticity of Demand

    Income elasticity of demand is a measure of how consumer demand changes when income changes.
  8. Economics

    Understanding Implicit Costs

    An implicit cost is any cost associated with not taking a certain action.
  9. Fundamental Analysis

    Explaining the Empirical Rule

    The empirical rule provides a quick estimate of the spread of data in a normal statistical distribution.
  10. Economics

    Understanding Diseconomies of Scale

    Diseconomies of scale is the point where a business no longer experiences decreasing costs per unit of output.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!