Intertemporal equilibrium with production: bubbles and efficiency

Stefano Bosi (), Cuong Le van and Ngoc-Sang Pham
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Stefano Bosi: EPEE - University of Evry

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We consider a general equilibrium model with heterogeneous agents, borrowing constraints, and exogenous labor supply. First, the existence of intertemporal equilibrium is proved even if the aggregate capitals are not uniformly bounded above and the production functions are not time invariant. Second, (i) we call by physical capital bubble a situation in which the fundamental value of physical capital is lower than its price, (ii) we say that the interest rates are low if the sum of interest rates is finite. We show that physical capital bubble is equivalent to a situation with low interest rates. Last, we prove that with linear technologies, every intertemporal equilibrium is efficient. Moreover, there is a room for both efficiency and bubble

Keywords: Intertemporal equilibrium; physical capital bubble; efficiency; infinite horizon (search for similar items in EconPapers)
JEL-codes: C62 D31 D91 G10 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2014-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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ftp://mse.univ-paris1.fr/pub/mse/CES2014/14043.pdf (application/pdf)

Related works:
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
Working Paper: Intertemporal equilibrium with production: bubbles and efficiency (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:14043

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