Discussion paper

DP18190 Dynamic Programming on a Quantum Annealer: Solving the RBC Model

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.

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Citation

Fernández-Villaverde, J and I Hull (eds) (2023), “DP18190 Dynamic Programming on a Quantum Annealer: Solving the RBC Model”, CEPR Press Discussion Paper No. 18190. https://cepr.org/publications/dp18190