Equilibria of Heterogeneous Economies with a Continuum of Agents
AbstractThe dynamic heterogeneous economies studied are described by a collection of heterogenous indi- viduals, their individual states and an aggregate state, such that the individuals' actions are given by the policy obtained from an optimization program and the aggregate law of motion is given by the aggregation of the individuals' actions. These economies have been used in computer simula- tions, however the analytical information about the equilibria of such economies is scarce and the classical approach of Stokey and Lucas with Prescott (1989) does not apply. This paper denes the relevant concepts of equilibria and proves the existence of such equilibria using the Schauder Fixed Point Theorem. In order to apply Schauder's theorem, a metric for the space of operators between measures is provided, and the compactness of a specic operator is proved. Moreover, the existence of a steady state for the aggregate state of the system is obtained through the Schauder-Tychonov Theorem. The results are related to models available in the literature.
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Bibliographic InfoPaper provided by Centro de Altisimos Estudios Rios Perez (CAERP) in its series Centro de Altisimos Estudios Rios Pe©rez(CAERP) with number 5.
Length: 25 pages
Date of creation: 2003
Date of revision:
Dynamic Programming; Spaces of Measures; Fixed Point Theorems; Heterogeneous Economies;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-15 (All new papers)
- NEP-DGE-2003-05-15 (Dynamic General Equilibrium)
- NEP-MAC-2003-05-15 (Macroeconomics)
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