- INFORMATION, STABILIZATION, AND WELFARE: THE CASE OF SUNSPOTS

Subir Chattopadhyay
Additional contact information
Subir Chattopadhyay: Universidad de Alicante

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: The stationary sunspot equilibria of a simple OLG economy with heterogeneous agents areconsidered. These equilibria are known to be suboptimal. The focus of the paper is on the efficacy,based on welfare economic considerations and informational requirements, of government policy insuch an environment.The main result is that knowledge of (a) the sunspot equilibrium net trades, (b) weak interval typeinformation on two parameters, and (c) weak set type information on the location of some optimalstationary allocation, is sufficient to induce a competitive location of some optimal stationaryallocation, is sufficient to induce a competitive equilibrium which is a pareto optimal Paretoimprovement over the sunspot allocation which has the further property of reaching a Pareto optimalstationary allocation in finite time.The result are interpreted as demonstrating that in a simple model with a sunspot environment, policyis very effective and that welfare economic considerations lead to stabilization.

Keywords: Stationary Sunspots; Overlapping geneations; golden rule (search for similar items in EconPapers)
JEL-codes: D52 D61 (search for similar items in EconPapers)
Pages: 19 pages
Date: 1999-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published by Ivie

Downloads: (external link)
http://www.ivie.es/downloads/docs/wpasad/wpasad-1999-02.pdf Fisrt version / Primera version, 1999 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1999-02

Access Statistics for this paper

More papers in Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) Contact information at EDIRC.
Bibliographic data for series maintained by Departamento de Edición ().