On existence and bubbles of Ramsey equilibrium with borrowing constraints

Robert Becker, Stefano Bosi (), Cuong Le Van () and Thomas Seegmuller ()
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Robert Becker: Indiana University [Bloomington] - Indiana University System
Stefano Bosi: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne
Cuong Le Van: IPAG Business School, VCREME - Van Xuan Center of Research in Economics, Management and Environment, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Thomas Seegmuller: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: We study the existence of equilibrium and rational bubbles in a Ramsey model with heterogeneous agents, borrowing constraints and endogenous labor. Applying Kakutani's fixed-point theorem, we prove the existence of equilibrium in a time-truncated bounded economy. A common argument shows this solution to be an equilibrium for any unbounded economy with the same fundamentals. Taking the limit of a sequence of truncated economies, we eventually obtain the existence of equilibrium in the Ramsey model. In the second part of the paper, we address the issue of rational bubbles and we prove that they never occur in a productive economy à la Ramsey.

Keywords: Existence of equilibrium; Bubbles; Ramsey model; Heterogeneous agents; Borrowing constraint; Endogenous labor (search for similar items in EconPapers)
Date: 2013-11-26
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01302535

DOI: 10.1007/s00199-014-0810-6

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