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On existence and bubbles of Ramsey equilibrium with borrowing constraints

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  • Robert Becker
  • Stefano Bosi
  • Cuong Le Van
  • Thomas Seegmuller

Abstract

We address the issues of existence of Ramsey equilibrium under bor- rowing constraints and occurrence of rational bubbles. First, we consider a time-truncated economy. Since the feasible allo- cations sets of our economy are uniformly bounded, we prove that there exists an equilibrium in a time-truncated bounded economy by Gale and Mas-Colell's (1975) theorem. Actually, this equilibrium turns out to be an equilibrium for the time-truncated economy as the uniform bounds are relaxed, as is commonly shown in general equilibrium proofs of existence for ffnite-dimensional commodity spaces. Second, we take the limit of a sequence of truncated, unbounded economies, and prove the existence of an intertemporal equilibrium in the limit economy. Third, rational bubbles never occur in our productive economy.

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Bibliographic Info

Paper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-105.

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Length: 23 pages
Date of creation: 25 Feb 2014
Date of revision:
Handle: RePEc:ipg:wpaper:2014-105

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Keywords: Ramsey model; heterogeneous agents; labor supply; borrowing constraint; bubbles.;

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References

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Citations

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Cited by:
  1. Ngoc-Sang Pham, 2013. "Collateral monetary equilibrium with liquidity constraints in an infinite horizon economy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00848057, HAL.
  2. Tsangyao Chang & Goodness C. Aye & Rangan Gupta, 2014. "Testing for Multiple Bubbles in the BRICS Stock Markets," Working Papers 201407, University of Pretoria, Department of Economics.
  3. Kazuo Nishimura & Carine Nourry & Thomas Seegmuller & Alain Venditti, 2014. "On the (De)Stabilizing Effect of Public Debt in a Ramsey Model with Heterogeneous Agents," Working Papers halshs-01059567, HAL.
  4. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2014. "Intertemporal equilibrium with production: bubbles and efficiency," Documents de travail du Centre d'Economie de la Sorbonne 14043, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. Mehmet Balcilar & Kirsten Thompson & Rangan Gupta & Renee van Eyden, 2014. "Testing the Asymmetric Effects of Financial Conditions in South Africa: A Nonlinear Vector Autoregression Approach," Working Papers 2014-468, Department of Research, Ipag Business School.
  6. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2014. "Intertemporal equilibrium with production: bubbles and efficiency," Working Papers 2014-306, Department of Research, Ipag Business School.
  7. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2014. "Intertemporal equilibrium with production: bubbles and efficiency," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01020888, HAL.
  8. Robert Becker & Ram Sewak Dubey & Tapan Mitra, 2012. "On Ramsey Equilibrium: Capital Ownership Pattern and Inefficiency," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2012-007, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  9. Frédéric Teulon, 2014. "Les bulles spéculatives et le marché de l’immobilier," Working Papers 2014-418, Department of Research, Ipag Business School.

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