Managerial Utility in DSGE Model

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F49777513%3A23510%2F17%3A43949396" target="_blank" >RIV/49777513:23510/17:43949396 - isvavai.cz</a>
Result on the web
<a href="http://www.lef-tul.cz/sekce/LEF_2017.pdf" target="_blank" >http://www.lef-tul.cz/sekce/LEF_2017.pdf</a>
DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Managerial Utility in DSGE Model
Original language description
In the paper the new DSGE model is developed. All contemporary used models are built on households’ utility maximization and firms’ profit maximization. There is assumed that the households are owners of the firms and instruct managers to fulfil the maximum of profit. In our model there are two utility maximization problems, the first one is standard households’ dynamic problem and the second one is static managers’ utility maximization under constraint of exhausting the whole production by the owners of labour and capital, i.e. households. The arguments of managerial utility function are the amount of labour and capital hired. A new factor of production has to be included in the production function. It is the managers’ effort as a specific factor of production but this effort is not awarded at all as in presented basic model or the award for managers could be negligible to their marginal product. The first order condition of this problem compares the marginal utility from hired factor with the cost for factor payment. The key feature of the model is then overpayment of factors of production above their marginal productivity. Model completely separates the decision making of households and firms while the profit maximization approach assumes the collaboration between them.
Czech name
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Czech description
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Publication year
2017
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Proceedings of the 13th International Conference Liberec Economic Forum 2017
ISBN
978-80-7494-349-2
ISSN
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e-ISSN
neuvedeno
Number of pages
8
Pages from-to
63-70
Publisher name
Technical University of Liberec
Place of publication
Liberec
Event location
Liberec
Event date
Sep 11, 2017
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
000426486500007

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