On a Unique Nondegenerate Distribution of Agents in the Huggett Model

Timothy Kam

No 478, PIE/CIS Discussion Paper from Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University

Abstract: A theoretical curiosity remains in the Huggett [1993] model as to the possible existence of a unique and degenerate stationary distribution of agent types. This coincides with the possibility that an equilibrium individual state space may turn out to be trivial in the sense that every agent never escapes the binding common borrowing constraint. In this note, we extend and reinforce the proof of Lemma 3 in Huggett [1993]. By invoking a simple comparative-static argument, we establish that Huggett's result of a unique stationary equilibrium distribution of agents must be one that is nontrivial or nondegenerate.

Keywords: Compactness; Individual state space; Stationary distribution (search for similar items in EconPapers)
JEL-codes: C62 D31 D52 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2010-06
New Economics Papers: this item is included in nep-dge
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Related works:
Working Paper: On an unique nondegenerate distribution of agents in the Huggett model (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:piecis:478

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