On Existence and Bubbles of Ramsey Equilibrium with Borrowing Constraints

Robert Becker, Stefano Bosi (), Cuong Le Van () and Thomas Seegmuller ()
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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, 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 a nonstandard fixed-point theorem by Gale and Mas-Colell's (1975), 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: heterogeneous agents; borrowing constraint; endogenous labor; existence of equilibrium; bubbles; Ramsey model (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-dge and nep-mic
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00793530v2
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: On existence and bubbles of Ramsey equilibrium with borrowing constraints (2015)
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