Sustainable plans

Varadarajan Chari and Patrick Kehoe

No 122, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We 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 rationality conditions for the government and for private agents. We provide a complete characterization of the sustainable equilibrium outcomes for a variant of Fischer?s (1980) model of capital taxation. We also relate our work to recent developments in the theory of repeated games.

Keywords: Game; theory (search for similar items in EconPapers)
Date: 1989
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Citations: View citations in EconPapers (4)

Published in Journal of Political Economy (Vol.98, n.4, August 1990, pp. 783-802) ; Persson, Thorsten, Tabellini, Guido, eds. Monetary and Fiscal Policy. Vol. 1. Credibility. Cambridge : MIT Press, 1994. pp. 143-163.

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Related works:
Working Paper: Sustainable Plans (1998)
Journal Article: Sustainable Plans (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:122

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