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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
    DOI: 10.1016/j.mathsocsci.2011.11.002
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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    1. Zhigang Feng & Jianjun Miao & Adrian Peralta-Alva & Manuel S. Santos, 2009. "Numerical simulation of nonoptimal dynamic equilibrium models," Working Papers 2009-018, Federal Reserve Bank of St. Louis.
    2. Greenwood, Jeremy & Huffman, Gregory W., 1993. "On the existence of nonoptimal equilibria in dynamic stochastic economies," Working Papers 9330, Federal Reserve Bank of Dallas.
    3. 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.
    4. Olivier F. Morand & Kevin L. Reffett, 2002. "Existence and Uniqueness of Equilibrium in Nonoptimal Unbounded Infinite Horizon Economies," Tinbergen Institute Discussion Papers 02-085/2, Tinbergen Institute.
    5. 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.
    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;Society for the Advancement of Economic Theory (SAET), vol. 20(1), pages 133-158.
    8. 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.
    9. 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.
    10. Cuong Le Van & Cagri Saglam & Selman Erol, 2011. "Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference," Working Papers 04, Development and Policies Research Center (DEPOCEN), Vietnam.
    11. 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.
    12. repec:hal:journl:halshs-00639731 is not listed on IDEAS
    13. 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.
    14. Coleman, Wilbur John, II, 1991. "Equilibrium in a Production Economy with an Income Tax," Econometrica, Econometric Society, vol. 59(4), pages 1091-1104, July.
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