Ramsey Equilibrium in a Model with Liberal Borrowing

Becker, Robert A.; Borissov, Kirill; Dubey, Ram Sewak

doi:10.2139/ssrn.2563040

Cited by 3 publications

(4 citation statements)

References 22 publications

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“…Our idea is, that individual agents are allowed to incur debt (what weakens the market imperfection) but the community as a whole has to hold a non-negative capital stock. Like Becker et al (2015), we avoid the market imperfection that forbid the households to incur debt and define a new capital restriction instead.…”

Section: Introductionmentioning

confidence: 99%

“…An approach to weaken the assumption of a non-negative capital stock of each household in an infinite time horizon model is the liberal borrowing constraint of Becker et al (2015). In this model households are allowed even to hold negative capital stocks only if they can cover their loans by future wage incomes for a given finite time horizon.…”

Section: Introductionmentioning

confidence: 99%

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Pareto-Optima for a Generalized Ramsey Model

Frerick¹,

Müller–Fürstenberger²,

Sachs³

et al. 2019

Preprint

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We consider a Ramsey model with several households with heterogeneous preferences who are able to borrow capital to each other. Since the capital constraints of one household then depends on the others' capital, one can no longer optimize each household's welfare individually. This problem formulation leads to a Pareto optimization problem. We consider existence and first order optimality conditions as well as some numerical results.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Pareto-Optima for a Generalized Ramsey Model

Frerick¹,

Müller–Fürstenberger²,

Sachs³

et al. 2019

Preprint

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“…Note that extraction rates are determined here in an equilibrium by the market forces of supply and demand.20 The proof of Theorem A.1 is based on the ideas presented inBecker et al (2015). The existence of equilibrium in the considered Ramsey-type model can be also proved along the lines ofBecker et al (1991).…”

mentioning

confidence: 96%

“…The proof of Theorem B.1 is based on the ideas presented inBecker et al (2015). The existence of equilibrium in the considered Ramsey-type model can be also proved along the lines ofBecker et al (1991).…”

mentioning

confidence: 98%

Economic growth and property rights on natural resources

Borissov

Pakhnin

2016

Econ Theory

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We consider two models of economic growth with exhaustible natural resources and agents heterogeneous in their time preferences. In the first model, we assume private ownership of natural resources and show that every competitive equilibrium converges to a balanced-growth equilibrium with the long-run rate of growth being determined by the discount factor of the most patient agents. In the second model, natural resources are public property and the resource extraction rate is determined by majority voting. For this model we define an intertemporal voting equilibrium and prove that it also converges to a balanced-growth equilibrium. In this scenario the long-run rate of growth is determined by the median discount factor. Our results suggest that if the most patient agents do not constitute a majority of the population, private ownership of natural resources results in a higher rate of growth than public ownership. At the same time, private ownership leads to higher inequality than public ownership, and if inequality impedes growth, then the public property regime is likely to result in a higher long-run rate of growth. However, an appropriate redistributive policy can eliminate the negative impact of inequality on growth.

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