Efficiency and Representation of a General Equilibrium with Time-Dependent Preferences

32 Pages Posted: 27 Jan 2013 Last revised: 26 Nov 2013

Paweł Dziewulski

University of Oxford - Department of Economics

Date Written: November 26, 2013

Abstract

This paper focuses on the welfare properties of equilibria in exchange economies with time-dependent preferences. We introduce a notion of recursive efficiency and show that any quilibrium allocation is efficient in the sense defined. Therefore, we present a version of the First Fundamental Welfare Theorem for this class of economies. Moreover, we present a social welfare function with maximisers that coincide with recursively efficient allocations, and prove that every equilibrium can be represented by a solution to a social welfare optimisation problem.

Keywords: time-dependent preferences, general equilibrium, First Fundamental Welfare Theorem, social welfare, hyperbolic discounting

JEL Classification: D51, D60, D91

Suggested Citation

Dziewulski, Paweł, Efficiency and Representation of a General Equilibrium with Time-Dependent Preferences (November 26, 2013). Available at SSRN: https://ssrn.com/abstract=2207733 or http://dx.doi.org/10.2139/ssrn.2207733

Paweł Dziewulski (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3UQ
United Kingdom

HOME PAGE: http://users.ox.ac.uk/~shil3804/

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