Working Paper: NBER ID: w31326
Authors: Jess Fernández-Villaverde; Isaiah J. Hull
Abstract: We introduce a novel approach to solving dynamic programming problems, such as those in many economic models, on a quantum annealer, a specialized device that performs combinatorial optimization. Quantum annealers attempt to solve an NP-hard problem by starting in a quantum superposition of all states and generating candidate global solutions in milliseconds, irrespective of problem size. Using existing quantum hardware, we achieve an order-of-magnitude speed-up in solving the real business cycle model over benchmarks in the literature. We also provide a detailed introduction to quantum annealing and discuss its potential use for more challenging economic problems.
Keywords: quantum annealing; dynamic programming; real business cycle model; economic models
JEL Codes: C63; C78; E37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| quantum annealers (C69) | speedup in solving the RBC model (C54) |
| quantum annealers (C69) | reduction in computation time (C63) |
| quantum annealers (C69) | broader applicability of dynamic programming solutions in economics (C61) |