Abstract

http://ssrn.com/abstract=2003000
 
 

Footnotes (5)



 


 



On Existence, Efficiency and Bubbles of Ramsey Equilibrium with Borrowing Constraints


Robert A. Becker


Indiana University Bloomington - Department of Economics

Stefano Bosi


Université d'Évry

Cuong Le Van


Université Paris I Panthéon-Sorbonne

Thomas Seegmuller


Aix-Marseille University - Aix-Marseille School of Economics

NOVEMBER 11, 2012


Abstract:     
We address the fundamental issues of existence and efficiency of an equilibrium in a Ramsey model with many agents, where agents have heterogeneous discounting, elastic labor supply and face borrowing constraints.

The existence of rational bubbles is also tackled. In the first part, we prove the equilibrium existence in a truncated bounded economy through a fixed-point argument by Gale and Mas-Colell (1975). This equilibrium is also an equilibrium of any unbounded economy with the same fundamentals. The proof of existence is eventually given for an infinite horizon economy as a limit of a sequence of truncated economies. Our general approach is suitable for applications to other models with different market imperfections. In the second part, we show the impossibility of bubbles in a productive economy and we give sufficient conditions for equilibrium efficiency.

Number of Pages in PDF File: 44

Keywords: Ramsey equilibrium, existence, efficiency, bubbles, heterogeneous agents, endogenous labor supply, borrowing constraint

JEL Classification: C62, D31, D91, G10

working papers series





Download This Paper

Date posted: February 13, 2012 ; Last revised: December 1, 2012

Suggested Citation

Becker, Robert A. and Bosi, Stefano and Le Van, Cuong and Seegmuller, Thomas, On Existence, Efficiency and Bubbles of Ramsey Equilibrium with Borrowing Constraints (NOVEMBER 11, 2012). Available at SSRN: http://ssrn.com/abstract=2003000 or http://dx.doi.org/10.2139/ssrn.2003000

Contact Information

Robert A. Becker (Contact Author)
Indiana University Bloomington - Department of Economics ( email )
Wylie Hall
Bloomington, IN 47405-6620
United States
Stefano Bosi
Université d'Évry ( email )
F-91025 Evry Cedex
France
(33) 1 69 47 70 47 (Phone)
(33) 1 69 47 70 50 (Fax)
Cuong Le Van
Université Paris I Panthéon-Sorbonne ( email )
12, place du Panthéon
Paris, IL
France
Thomas Seegmuller
Aix-Marseille University - Aix-Marseille School of Economics ( email )
Centre de la vieille Charité
2 rue de la Charité
13236 Marseille
France
Feedback to SSRN


Paper statistics
Abstract Views: 256
Downloads: 44
Footnotes:  5

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.813 seconds