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Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor

Abstract

In this paper, we provide a set of sufficient conditions under which recursive competitive equilibrium exist and are unique for a large class of distorted dynamic equilibrium models with capital and elastic labor supply. We develop a monotone map approach to the problem. The class of economies for which we are able to obtain our existence result is apparently considerably larger than those considered in previous work. Additionally unlike previous work, we are able to also prove that this equilibrium is unique. We conclude by applying the new results to some important examples of monetary economies often used in applied work.

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Paper provided by Department of Economics, W. P. Carey School of Business, Arizona State University in its series Working Papers with number 2132846.

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Find related papers by JEL classification:
  • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
  • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
  • D90 - Microeconomics - - Intertemporal Choice - - - General
  • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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  17. Wilbur John Coleman, 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.).
  18. Cooley, T.F. & Hansen, G.D., 1988. "The Inflation Tax In A Real Business Cycle Model," Papers 88-05, Rochester, Business - General.
  19. Manuel S. Santos & Jesus Vigo-Aguiar, 1998. "Analysis of a Numerical Dynamic Programming Algorithm Applied to Economic Models," Econometrica, Econometric Society, vol. 66(2), pages 409-426, March.
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