Recursive Competitive Equilibrium - RCE


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.

  1. Pareto Analysis

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

  3. Classical Economics

  4. Neoclassical Economics

  5. Macroeconomics

  6. Premium to Surplus Ratio

Related Articles
  1. Economics

    The Austrian School Of Economics

  2. Options & Futures

    Nobel Winners Are Economic Prizes

  3. Economics

    The History Of Economic Thought

  4. Options & Futures

    Explaining The World Through Macroeconomic Analysis

  5. Economics

    The Importance Of Inflation And GDP

  6. Fundamental Analysis

    What are the most common issues with Serial Correlation in stocks?

    Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns.
  7. Bonds & Fixed Income


    Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon.
  8. Fundamental Analysis

    What does the term 'invisible hand' refer to in the economy?

    Discover and understand the concept of the "invisible hand" as explained by Adam Smith, considered the founder of modern economic theory.
  9. Fundamental Analysis


    Take a deeper look at the variables that impact current account deficits, and learn why not all types of deficits have equal impacts on a nation's economy.
  10. Fundamental Analysis

    What is the difference between yield and rate of return?

    Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept of yield.

You May Also Like

Hot Definitions
  1. Commercial Paper

  2. Federal Funds Rate

  3. Fixed Asset

  4. Break-Even Analysis

  5. Key Performance Indicators - KPI

  6. Bank Guarantee

Trading Center