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On the Existence of Equilibrium in Bewley Economies with Production

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

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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.

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