In this paper, we prove the existence of a recursive competitive equilibrium (RCE) for an Aiyagari style economy with permanent income shocks and perpetual youth structure. We show that there exist equilibria where borrowing constraints are never binding. This allows us to establish a non-trivial lower bound on the equilibrium interest rate. To solve the individual’s problem, we present a new a...

A core allocation of a complete information economy can be characterized as one that would not be unanimously rejected in favor of another feasible alternative by any coalition. We use this test of coalitional voting in an incomplete information environment to formalize a notion of resilience. Since information transmission is implicit in the Bayesian equilibria of such voting games, this appro...

We present a Solow-type growth model without constant returns. The population is heterogeneous with respect to capital per head, rate of saving, depreciation, and growth. We employ a continuous version of the Shapley value to divide total output among the di¤erent groups. In contrast to the standard Solow model, or its endogenous growth manifestation (labelled AK-type growth models), there may ...

In this paper we investigate experimentally the effects of a wage tax financed unemployment benefit system on the development of the budget deficit, unemployment, and some other indicators of economic performance in an international economy. We find support for the hypothesis that out-of-equilibrium price uncertainty affects the behavior of economic agents. Due to uncertainty about prices risk-...

We prove existence of an Arrow–Debreu equilibrium when agents’ preferences exhibit local substitution in the sense of Hindy, Huang, and Kreps (1992). Efficient allocations and supporting price functionals are identified and characterized. Under Hindy–Huang–Kreps preferences, equilibrium price processes are semimartingales for arbitrary endowments, but in general, they do not belong to the space...

In a continuous-time economy with complete markets, we study how the heterogeneity in the individual consumers’ risk tolerance and impatience affects the representative consumer’s risk tolerance and impatience. We derive some formulas, which indicate that the representative consumer’s impatience decrease over time, and whether his risk tolerance increases or decreases over time depends on the s...

Available online 13 May 2008 This paperpresents a difference in the comparative statics of general equilibriummodelswith land when there are finitely many agents, and when there is a continuum of agents. Restricting attention to quasi-linear and Cobb–Douglas utility, it is shown that with finitely many agents, an increase in the (marginal) commuting cost increases land rent per unit (that is, l...

In an exchange economy with a finite number of indivisible goods, we analyze a dynamic trading process of coalitional recontracting where agents may make mistakes with small probability. We show first that the recurrent classes of the unperturbed (mistakefree) process consist of (i) all core allocations as absorbing states, and (ii) cycles of non-core allocations. Next, we introduce a perturbed...

We prove the non-emptiness of the core of an NTU game satisfying a condition of payoff-dependent balancedness, based on transfer rate mappings. We also define a new equilibrium condition on transfer rates and we prove the existence of core payoff vectors satisfying this condition. The additional requirement of transfer rate equilibrium refines the core concept and allows the selection of specif...

Head again the correspondence with Her Majesty's Secretary Military (Separate), to Secretary Of State, noted on the marof State, Ho. 121, dated 2ud Juiie, gin, regarding the establishl5pJblic?From Secretary of State, mc,,tofa B?atce? for "l? No. 40, dated 30tli April, 1867. supervision ot tllO public Public?To Secretary of 8tate, health throughout India, No. loJ, dated 10th August, 18C7. ant^ t...