@techreport{NBERw2213,
 title = "Dynamic Optimization in Two-Party Models",
 author = "Warwick J. McKibbin and Nouriel Roubini and Jeffrey Sachs",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "2213",
 year = "1987",
 month = "April",
 URL = "http://www.nber.org/papers/w2213",
 abstract = {The goal of this paper is to study the problem of optimal dynamic policy formulation with competing political parties. We study a general class of problems, in which the two competing political parties have quadratic intertemporal objective functions, and in which the economy has a linear structure and a multidimensional state space. For the general linear quadratic problem we develop a numerical dynamic programming algorithm to solve for optimal policies of each party taking into account the party's objectives; the structure of the economy ; the probability of future election results; and the objectives of the other political party.},
}