Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor

In this paper, we provide a set of sufficient conditions under which recursive competitive equilibrium exists and is unique for a large class of distorted dynamic equilibrium models with capital and elastic labor supply. We develop a lattice based approach to the problem. The class of economies for which we are able to obtain our existence and uniqueness result is considerably larger than those considered in previous work. We conclude by applying the new results to some important examples of monetary economies often used in applied work. Journal of Economic Literature Classification Numbers: C62, D51, D90, E10. 2001 Elsevier Science (USA)