On the Existence of Equilibrium in Bewley Economies with Production

Acikgoz, Omer (2015): On the Existence of Equilibrium in Bewley Economies with Production.

Abstract

I provide a proof of existence of stationary recursive competitive equilibrium in Bewley economies with production under very permissive assumptions. In particular, (i) utility function is allowed to be unbounded, and (ii) the underlying discrete idiosyncratic productivity process is allowed to take any form, aside from mild restrictions. Some of the intermediate results provide theoretical basis for assumptions often made in the quantitative macroeconomics literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: Recursive Competitive Equilibrium, Bewley/Huggett/Aiyagari model
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium; E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth

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