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 distor...

Full description

Saved in:
Bibliographic Details
Published in:Journal of monetary economics 2003-09, Vol.50 (6), p.1351-1373
Main Authors: Morand, Olivier F., Reffett, Kevin L.
Format: Article
Language:English
Subjects:
Algorithms
Dynamic models
Economics
Equilibrium
Finance
Growth models
Macroeconomics
Markovian processes
Monetary economics
Nonoptimal
Unbounded
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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 Markovian equilibrium are well known for the compact state space case, no similar sufficient conditions exist for unbounded growth. This paper provides such a set of sufficient conditions, and presents a computational algorithm that will prove asymptotically consistent when computing Markovian equilibrium.
ISSN:0304-3932
1873-1295
DOI:10.1016/S0304-3932(03)00082-5