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Recursive Allocations and Wealth Distribution with Multiple Goods: Existence, Survivorship, and Dynamics

62 Pages Posted: 23 Jul 2010 Last revised: 30 Nov 2017

Ric Colacito

University of North Carolina Kenan-Flagler Business School

Mariano (Max) Massimiliano Croce

University of North Carolina Kenan-Flagler Business School; Centre for Economic Policy Research (CEPR)

Zhao Liu

Duke University, Department of Economics, Students

Date Written: November 29, 2017

Abstract

We characterize the equilibrium of a complete markets economy with multiple agents featuring 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 also show that perturbation methods replicate the salient features of our recursive risk-sharing scheme, provided that higher order terms are included.

JEL Classification: C62, F37, G1

Suggested Citation

Colacito, Ric and Croce, Mariano (Max) Massimiliano and Liu, Zhao, Recursive Allocations and Wealth Distribution with Multiple Goods: Existence, Survivorship, and Dynamics (November 29, 2017). Available at SSRN: https://ssrn.com/abstract=1647883 or http://dx.doi.org/10.2139/ssrn.1647883

Riccardo Colacito

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://www.unc.edu/~colacitr

Mariano Croce (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

McColl Builiding
Chapel Hill, NC North Carolina 27599-3490
United States

HOME PAGE: http://https://sites.google.com/view/mmcroce/home

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Zhao Liu

Duke University, Department of Economics, Students ( email )

Durham, NC
United States

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