Global asymptotic stability of a competitive equilibrium with recursive preferences

Hyun Park ()
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Hyun Park: Department of Economics, University of Essex, Colchester, CO4 3SQ, UK

Economic Theory, 2000, vol. 15, issue 3, 565-584

Abstract: This paper demonstrates global stability of a competitive equilibrium in a multi-sector model of many firms, each of which exhibits constant returns to scale technology, and of infinitely lived consumers, whose preferences are recursive but not necessarily additively separable. In the topology induced by a sup-norm, the dominant diagonal blocks condition (Araujo and Scheinkman (Econometrica 45, 1977)) allows us to apply the implicit function theorem to obtain continuity of the equilibrium path. If a stationary equilibrium is locally asymptotically stable, then the continuity of the equilibrium path and smoothness of a weight function on heterogeneous consumers imply that all equilibrium paths converge to the steady state. The dominant diagonal blocks condition is also shown to be sufficient for the local asymptotic turnpike property.

Keywords: Turnpike property; Recursive preferences; Heterogeneous agents. (search for similar items in EconPapers)
JEL-codes: C62 D51 O41 (search for similar items in EconPapers)
Date: 2000-04-13
Note: Received: December 13, 1996; revised version: June 2, 1999
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Citations: View citations in EconPapers (4)

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