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Competitive Equilibria of Economies with a Continuum of Consumers and Aggregate Shocks

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Listed author(s):
  • Jianjun Miao

Abstract

This paper studies competitive equilibria of a production economy with aggregate productivity shocks. There is a continuum of consumers who face borrowing constraints and individual labor endowment shocks. The dynamic economy is described in terms of sequences of aggregate distributions. The existence of sequential competitive equilibria is proven and a recursive characterization is established. In particular, it is shown that for any sequential competitive equilibrium, there exists a payoff equivalent sequential competitive equilibrium that is generated by a suitably defined recursive equilibrium with state variables including continuation value.

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File URL: http://down.aefweb.net/WorkingPapers/w460.pdf
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Paper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 460.

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Length: 32 pages
Date of creation: Dec 2004
Publication status: Published in Journal of Economic Theory 128 (2006), 274-298
Handle: RePEc:cuf:wpaper:460
Contact details of provider: Web page: http://cema.cufe.edu.cn/

More information through EDIRC

Keywords: competitive equilibrium; recursive equilibrium; aggregate distribution; heterogeneity; incomplete markets;

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Find related papers by JEL classification:
  • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
  • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
  • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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