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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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    File URL: http://www.sciencedirect.com/science/article/pii/S0165489611001223
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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
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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    1. 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.
    2. Zhigang Feng & Manuel Santos & Adrian Peralta-Alva & Jianjun Miao, 2009. "Numerical Simulation of Nonoptimal Dynamic Equilibrium Models," 2009 Meeting Papers 541, Society for Economic Dynamics.
    3. Jeremy Greenwood & Gregory W. Huffman, 1993. "On the existence of nonoptimal equilibria in dynamic stochastic economies," Research Paper 9330, Federal Reserve Bank of Dallas.
    4. 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.
    5. 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.
    6. Leonard J Mirman & Olivier F. Morand & Kevin L. Reffett, 2004. "A Qualitative Approach to Markovian Equilibrium in Infinite Horizon Economies with Capital," Levine's Bibliography 122247000000000224, UCLA Department of Economics.
    7. Lisa Morhaim & Charles-Henri Dimaria & Cuong Le Van, 2002. "The discrete time version of the Romer model," Economic Theory, Springer, vol. 20(1), pages 133-158.
    8. repec:hal:journl:halshs-00639731 is not listed on IDEAS
    9. Erol, Selman & Le Van, Cuong & Saglam, Cagri, 2011. "Existence, optimality and dynamics of equilibria with endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 170-179, March.
    10. Datta, Manjira & Mirman, Leonard J. & Reffett, Kevin L., 2002. "Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor," Journal of Economic Theory, Elsevier, vol. 103(2), pages 377-410, April.
    11. Wilbur John Coleman II, 1989. "Equilibrium in a production economy with an income tax," International Finance Discussion Papers 366, Board of Governors of the Federal Reserve System (U.S.).
    12. 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.
    13. 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.
    14. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
    15. 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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