Intertemporal equilibrium with production: bubbles and efficiency

Stefano Bosi (stefano.bosi@univ-lille1.fr), Cuong Le Van (levan@univ-paris1.fr) and Ngoc-Sang Pham
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Stefano Bosi: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne
Cuong Le Van: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IPAG Business School, VCREME - Van Xuan Center of Research in Economics, Management and Environment

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Abstract: We consider a general equilibrium model with heterogeneous agents, borrowing constraints, and exogenous labor supply. First, the existence of intertemporal equilibrium is proved even if the aggregate capitals are not uniformly bounded above and the production functions are not time invariant. Second, (i) we call by physical capital bubble a situation in which the fundamental value of physical capital is lower than its price, (ii) we say that the interest rates are low if the sum of interest rates is finite. We show that physical capital bubble is equivalent to a situation with low interest rates. Last, we prove that with linear technologies, every intertemporal equilibrium is efficient. Moreover, there is a room for both efficiency and bubble.

Keywords: intertemporal equilibrium; physical capital bubble; efficiency; infinite horizon; équilibre intertemporel avec production; bulle du capital physique; efficience; horizon infini (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-dge
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01020888
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Published in 2014

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Related works:
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
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