Proof of Steady-State Multiplicity in Aiyagari

Kieran James Walsh

Papers from arXiv.org

Abstract: I provide the first analytic construction of a canonical Aiyagari economy exhibiting at least three steady states. Along the way, I provide new upper and lower bounds on the stationary capital supply for the case where the net return on saving is negative. I also give parameter restrictions that guarantee the existence of a steady state with a rental rate in the neighborhood of a remarkably simple number: the capital share times the depreciation rate.

Date: 2026-09
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