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Ramsey Equilibrium With Liberal Borrowing, Robert A. Becker, Kirill Borissov, Ram Dubey
Ramsey Equilibrium With Liberal Borrowing, Robert A. Becker, Kirill Borissov, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper considers a multi-agent one-sector Ramsey equilibrium growth model with borrowing constraints. The extreme borrowing constraint used in the classical version of the model, surveyed in Becker (2006), and the limited form of borrowing constraint examined in Borissov and Dubey (2015) are relaxed to allow more liberal borrowing by the households. A perfect foresight equilibrium is shown to exist in this economy. We describe the steady state equilibria for the liberal borrowing regime and show that as the borrowing regime is progressively liberalized, the steady state wealth inequality increases. Unlike the case of a limited borrowing regime, an equilibrium …
A Characterization Of Ramsey Equilibrium In A Model With Limited Borrowing, Kirill Borissov, Ram Dubey
A Characterization Of Ramsey Equilibrium In A Model With Limited Borrowing, Kirill Borissov, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper considers a one-sector economic growth model with several infinitely-lived heterogeneous households, who differ both in the discount factors as well as preferences over consumption. Unlike the extreme form of borrowing constraint observed in the classical Ramsey model, recently surveyed in Becker (2006), we allow limited borrowing by the households and prove the existence of a perfect foresight equilibrium. We also show that irrespective of production technology employed by the firms, the capital stock sequence converges to the steady state stock and from some time onward all impatient households are in the maximum borrowing state, whereas the most patient …