Abstract
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.
Original language | English (US) |
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Pages (from-to) | 1351-1373 |
Number of pages | 23 |
Journal | Journal of Monetary Economics |
Volume | 50 |
Issue number | 6 |
DOIs | |
State | Published - Sep 2003 |
Keywords
- Dynamic models
- Equilibrium
- Nonoptimal
- Unbounded
ASJC Scopus subject areas
- Finance
- Economics and Econometrics