Increasing Returns in Infinite-Horizon Economies

Part II : Infinite Horizon Economies

Assume a representative-agent economy with one good. Let time be indexed by t=0,1,2,.... Suppose that there is no uncertainty at time zero and that S branches stem out of it. Similarly, from each of these branches, S more branches stem out, and so on. For a given t, label the (cross-section of) nodes as {1, ..., St} and note that St increases over time. Our agent’s utility will now be defined o...

Implementation in production economies with increasing returns

In this paper we investigate incentive aspects of a general price-setting equilibrium principle in production economies with increasing returns or more general types of non-convexities. We do so by introducing the notion of generalized mechanism. We allow preferences and individual endowments to be unknown to the planner. We present a simple generalized mechanism whose social equilibrium alloca...

Convergence of trajectories in infinite horizon optimization

In this paper, we investigate the convergence of a sequence of minimizing trajectories in infinite horizon optimization problems. The convergence is considered in the sense of ideals and their particular case called the statistical convergence. The optimality is defined as a total cost over the infinite horizon.

Working Paper Alfred P. Sloan School of Management Determinacy of Equilibrium in Infinite Horizon Economies: a Perspective Determinacy of Equilibrium in Infinite Horizon Economies: a Perspective

Existence and Uniqueness of Equilibrium in Nonoptimal Unbounded Infinite Horizon Economies

In applied work in macroeconomics and finance, nonoptimal infinite horizon economies are often studied in which the state-space is unbounded. Important examples of such economies are single-sector growth models with production externalities, valued fiat money, monopolistic competition, and/or distortionary government taxation. Although sufficient conditions for existence and uniqueness of Marko...