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Journal of Applied Mathematics
Volume 2014 (2014), Article ID 495089, 9 pages
Research Article

A General Setting and Solution of Bellman Equation in Monetary Theory

School of Statistics, Southwestern University of Finance and Economics, Chengdu 610074, China

Received 28 September 2014; Revised 22 November 2014; Accepted 22 November 2014; Published 21 December 2014

Academic Editor: Zhihua Zhang

Copyright © 2014 Xiaoli Gan and Wanbo Lu. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


As an important tool in theoretical economics, Bellman equation is very powerful in solving optimization problems of discrete time and is frequently used in monetary theory. Because there is not a general method to solve this problem in monetary theory, it is hard to grasp the setting and solution of Bellman equation and easy to reach wrong conclusions. In this paper, we discuss the rules and problems that should be paid attention to when incorporating money into general equilibrium models. A general setting and solution of Bellman equation in monetary theory are provided. The proposed method is clear, is easy to grasp, is generalized, and always leads to the correct results.