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Equilibria of a stationary economy with recursive preferences

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Abstract

We consider an intertemporal stationary economy in discrete time, where agents have recursive preferences. Using dynamic programming, we show that equilibrium consumption trajectories from a capital stock are interior Pareto optima and are characterized by a strictly positive parameter in △n−1, the set of agents' initial weights. We then exhibit prices that support the Pareto optima and use the Negishi method to characterize the parameters corresponding to equilibria. Finally, we prove the existence of equilibria and show that the number of regular equilibria is odd.

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Communicated by W. Stadler

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Dana, R.A., Le Van, C. Equilibria of a stationary economy with recursive preferences. J Optim Theory Appl 71, 289–313 (1991). https://doi.org/10.1007/BF00939922

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Key Words

  • Intertemporal stationary economy
  • recursive preferences
  • Pareto optima
  • equilibria