On the Existence of a Ramsey Equilibrium with Endogenous Labor Supply and Borrowing Constraints

Stefano Bosi () and Cuong Le van
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Stefano Bosi: THEMA

No 24, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: In this paper, we study the existence of an intertemporal equilibrium in a Ramsey model with heterogenous discounting, elastic labor supply and borrowing constraints. Applying a fixed-point argument by Gale and Mas-Colell (1975), we prove the existence of an equilibrium in a truncated bounded economy. This equilibrium is also an equilibrium of any unbounded economy with the same fundamentals. Finally, we prove the existence of an equilibrium of an infinite-horizon economy as a limit of a sequence of truncated economies. On the one hand, our paper generalizes Becker et al. (1991) because of the elastic labor supply and, on the other hand, Bosi and Seegmuller (2010) because of a proof of global existence. Our methodology can be applied to other Ramsey models with different market imperfections.

Keywords: Existence of equilibrium; Ramsey model; heterogeneous agents; endogenous labor supply; borrowing constraint. (search for similar items in EconPapers)
JEL-codes: C62 D31 D91 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011
New Economics Papers: this item is included in nep-dge and nep-mic
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: On the existence of a Ramsey equilibrium with endogenous labor supply and borrowing constraints (2011)
Working Paper: On the existence of a Ramsey equilibrium with endogenous labor supply and borrowing constraints (2011)
Working Paper: On the existence of a Ramsey equilibrium with endogenous labor supply and borrowing constraints (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:2411

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