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Regularity of a general equilibrium in a model with infinite past and future

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Abstract

We develop easy-to-verify conditions assuring that comparative statics in a general equilibrium model where time is a real line is feasible, i.e., the implicit function theorem is applicable. Consider an equilibrium equation, $Upsilon(k,E)=k$ of a model where an equilibrium variable (k) is a continuous bounded function of time, real line, and the policy parameter (E) is a locally integrable function of time. The key conditions are time invariance of the equilibrium map $Upsilon$ and the requirement that the Fourier transform of the derivative of the map $Upsilon$ with respect to the equilibrium variable k does not return unity. Further, in a general constant-returns-to-scale production and homogeneous life-time-utility overlapping generations model we show that the first condition is satisfied at a balanced growth equilibrium and the second condition is satisfied for ``almost all'' policies that give rise to such equilibria.

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  • Rubinchik, Anna & Gorokhovsky, Alexander, "undated". "Regularity of a general equilibrium in a model with infinite past and future," Working Papers WP2017/1, University of Haifa, Department of Economics.
  • Handle: RePEc:haf:huedwp:wp201701
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    Cited by:

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    2. Gorokhovsky, Alexander & Rubinchik, Anna, 2022. "Necessary and sufficient conditions for determinacy of asymptotically stationary equilibria in OLG models," Journal of Economic Theory, Elsevier, vol. 204(C).

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    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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