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Existence of competitive equilibrium in a non-optimal one-sector economy without conditions on the distorted marginal product of capital

  • Crettez, Bertrand
  • Morhaim, Lisa
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    This paper develops a method for proving the existence of competitive equilibrium in a distorted/non-optimal one-sector economy–a discrete time variant of the Romer model–without conditions on the equilibrium value of the marginal product of capital. Existence is obtained under weaker conditions than in Le Van et al. (2002). Moreover, we provide an existence result for an economy with a regressive tax studied in Santos (2002). The proofs rely on ideas of Becker and Boyd (1997).

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    Article provided by Elsevier in its journal Mathematical Social Sciences.

    Volume (Year): 63 (2012)
    Issue (Month): 3 ()
    Pages: 197-206

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    Handle: RePEc:eee:matsoc:v:63:y:2012:i:3:p:197-206
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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
    2. Morand, Olivier F. & Reffett, Kevin L., 2003. "Existence and uniqueness of equilibrium in nonoptimal unbounded infinite horizon economies," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1351-1373, September.
    3. Zhigang Feng & Jianjun Miao & Adrian Peralta-Alva & Manuel S. Santos, . "Numerical Simulation of Nonoptimal Dynamic Equilibrium Models," Boston University - Department of Economics - Working Papers Series wp2009-013, Boston University - Department of Economics.
    4. repec:hal:journl:halshs-00639731 is not listed on IDEAS
    5. Cuong Le Van & Cagri Saglam & Selman Erol, 2011. "Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00639731, HAL.
    6. Le Van, C. & Morhaim, L. & Dimaria, C.-H., 2000. "The Discrete Time Version of the Romer Model," Papiers d'Economie Mathématique et Applications 2000.63, Université Panthéon-Sorbonne (Paris 1).
    7. Mirman, Leonard J. & Morand, Olivier F. & Reffett, Kevin L., 2008. "A qualitative approach to Markovian equilibrium in infinite horizon economies with capital," Journal of Economic Theory, Elsevier, vol. 139(1), pages 75-98, March.
    8. Junjian Miao & Manuel Santos, 2005. "Numerical Solution of Dynamic Non-Optimal Economies," Boston University - Department of Economics - Working Papers Series WP2005-003, Boston University - Department of Economics.
    9. Manjira Datta & Leonard Mirman & Kevin Reffett, . "Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor," Working Papers 2132846, Department of Economics, W. P. Carey School of Business, Arizona State University.
    10. Jeremy Greenwood & Gregory W. Huffman, 1993. "On the existence of nonoptimal equilibria in dynamic stochastic economies," Research Paper 9330, Federal Reserve Bank of Dallas.
    11. Santos, Manuel S., 2002. "On Non-existence of Markov Equilibria in Competitive-Market Economies," Journal of Economic Theory, Elsevier, vol. 105(1), pages 73-98, July.
    12. Coleman, Wilbur II, 1997. "Equilibria in Distorted Infinite-Horizon Economies with Capital and Labor," Journal of Economic Theory, Elsevier, vol. 72(2), pages 446-461, February.
    13. Coleman, Wilbur John, II, 1991. "Equilibrium in a Production Economy with an Income Tax," Econometrica, Econometric Society, vol. 59(4), pages 1091-1104, July.
    14. Coleman, Wilbur II, 2000. "Uniqueness of an Equilibrium in Infinite-Horizon Economies Subject to Taxes and Externalities," Journal of Economic Theory, Elsevier, vol. 95(1), pages 71-78, November.
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