Sustainable Plans

Varadarajan Chari and Patrick Kehoe

Journal of Political Economy, 1990, vol. 98, issue 4, 783-802

Abstract: The authors propose a definition of time-consistent policy for infinite-horizon economies with competitive private agents. Allocations and policies are defined as functions of the history of past policies. A sustainable equilibrium is a sequence of history-contingent policies and allocations that satisfy certain sequential optimality conditions for the government and for private agents. The authors provide a complete characterization of the sustainable equilibrium outcomes for a variant of Stanley Fischer's model of capital taxation. They also relate their work to recent developments in the theory of repeated games. Copyright 1990 by University of Chicago Press.

Date: 1990
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Related works:
Working Paper: Sustainable Plans (1998)
Working Paper: Sustainable plans (1989)
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