On existence, effciency and bubbles of Ramsey equilibrium with borrowing constraints

Robert Becker, Stefano Bosi (), Cuong Le van and Thomas Seegmuller ()
Additional contact information
Stefano Bosi: EPEE, University of Evry
Thomas Seegmuller: Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS

No 15, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: We address the fundamental issues of existence and efficiency of an equilibrium in a Ramsey model with many agents, where agents have heterogenous discounting, elastic labor supply and face borrowing constraints. The existence of rational bubbles is also tackled. In the first part, we prove the equilibrium existence in a truncated bounded economy through a fixed-point argument by Gale and Mas-Colell (1975). This equilibrium is also an equilibrium of any unbounded economy with the same fundamentals. The proof of existence is eventually given for an infinitehorizon economy as a limit of a sequence of truncated economies. Our general approach is suitable for applications to other models with different market imperfections. In the second part, we show the impossibility of bubbles in a productive economy and we give sufficient conditions for equilibrium efficiency.

JEL-codes: C62 D31 D91 G10 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2013
New Economics Papers: this item is included in nep-dge and nep-mic
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: On existence, efficiency and bubbles of Ramsey equilibrium with borrowing constraints (2013)
Working Paper: On existence, efficiency and bubbles of Ramsey equilibrium with borrowing constraints (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:1513

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