Recursive Allocations and Wealth Distribution with Multiple Goods: Existence, Survivorship, and Dynamics
University of North Carolina, Chapel Hill - Kenan-Flagler Business School
Mariano Massimiliano Croce
University of North Carolina Kenan-Flagler Business School
August 1, 2011
We characterize the equilibrium of a complete markets economy with multiple agents displaying a preference for the timing of the resolution of uncertainty. Utilities are defined over an aggregate of two goods. We provide conditions under which the solution of the planner's problem exists and it features a non-degenerate invariant distribution of Pareto weights. We show that a first order Taylor expansion about the unconditional mean of the economy is not only highly inaccurate, but it also implies that one of the two agents receives no wealth in the long-run positive probability.
Number of Pages in PDF File: 37
JEL Classification: C62, F37working papers series
Date posted: July 23, 2010 ; Last revised: October 3, 2012
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