Capital Accumulation in an Economy with Heterogeneous Agents and Moral Hazard
AbstractThis paper studies a closed economy with a continuum of agents and moral hazard. Economic agents in the economy operate a stochastic production technology with capital and labor inputs in which the latter is private information. I characterize efficient allocations of capital, labor, and consumption in a stationary recursive equilibrium for a decentralized economy with component planners. Allocation and accumulation of capital are facilitated by a 'capital planner' who serves as a financial intermediary for the component planners. In equilibrium, private information lowers the equilibrium interest rate below agents' discount rate and I show that contrary to the private-information endowment economies, a moral-hazard productive economy can exhibit both endogenous lower and upper bounds on the stationary distribution of utility entitlements.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0012001.
Length: 28 pages
Date of creation: 12 Feb 2001
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Note: Type of Document - Acrobat PDF; pages: 28 ; figures: included
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Other versions of this item:
- Radim Bohacek, 2000. "Capital Accumulation in an Economy with Heterogeneous Agents and Moral Hazard," CERGE-EI Working Papers wp165, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-27 (All new papers)
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