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Radner equilibrium with population growth

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  • Jin Hyuk Choi
  • Kim Weston

Abstract

We prove the existence of a Radner equilibrium in a model with population growth and analyze the effects on asset prices. A finite population of agents grows indefinitely at a Poisson rate, while receiving unspanned income and choosing between consumption and investing into an annuity with infinitely-lived exponential preferences. After establishing the existence of an equilibrium for a truncated number of agents, we prove that an equilibrium exists for the model with unlimited population growth. Our numerics show that increasing the birth rate reduces oscillations in the equilibrium annuity price, and when younger agents prioritize the present more than older agents, the equilibrium annuity price rises compared to a uniform demographic.

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  • Jin Hyuk Choi & Kim Weston, 2025. "Radner equilibrium with population growth," Papers 2504.18009, arXiv.org.
    • Handle: RePEc:arx:papers:2504.18009
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    References listed on IDEAS

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    5. Kim Weston & Gordan Žitković, 2020. "An incomplete equilibrium with a stochastic annuity," Finance and Stochastics, Springer, vol. 24(2), pages 359-382, April.
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