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Misery and Luxury: Long Run Outcomes with Private Information

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  • Christopher Sleet
  • Sevin Yeltekin

Abstract

We characterize the long run outcome of a dynamic private information economy with public capital accumulation. The economy is typical of those assumed in the new dynamic public finance literature. We establish that almost all agents converge to misery or luxury and bound the fraction who are immiserated.

Suggested Citation

  • Christopher Sleet & Sevin Yeltekin, "undated". "Misery and Luxury: Long Run Outcomes with Private Information," GSIA Working Papers 2011-E19, Carnegie Mellon University, Tepper School of Business.
    • Handle: RePEc:cmu:gsiawp:-1702178580
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    File URL: https://student-3k.tepper.cmu.edu/gsiadoc/WP/2011-E19.pdf
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    References listed on IDEAS

    as
    1. Phelan, Christopher, 1998. "On the Long Run Implications of Repeated Moral Hazard," Journal of Economic Theory, Elsevier, vol. 79(2), pages 174-191, April.
    2. Khan, Aubhik & Ravikumar, B., 2001. "Growth and risk-sharing with private information," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 499-521, June.
    3. Emmanuel Farhi & Iván Werning, 2007. "Inequality and Social Discounting," Journal of Political Economy, University of Chicago Press, vol. 115(3), pages 365-402.
    4. Christopher Phelan, 1994. "Incentives and Aggregate Shocks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(4), pages 681-700.
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    Cited by:

    1. Charles Brendon, 2011. "Applying perturbation analysis to dynamic optimal tax problems," Economics Series Working Papers 581, University of Oxford, Department of Economics.

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