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.
@article{arxiv.2306.04285,
title = {Dynamic Programming on a Quantum Annealer: Solving the RBC Model},
author = {Jesús Fernández-Villaverde and Isaiah Hull},
journal= {arXiv preprint arXiv:2306.04285},
year = {2023}
}