Determinacy of equilibria in dynamic models with finitely many consumers

Timothy J. Kehoe, David K. Levine, Paul M. Romer

Research output: Contribution to journalArticle

42 Scopus citations

Abstract

We consider a production economy with a finite number of heterogeneous, infinitely lived consumers. We show that, if the economy is smooth enough, equilibria are locally unique for almost all endowments. We do so by converting the infinite-dimensional fixed point problem stated in terms of prices and commodities into a finite-dimensional Negishi problem involving individual weights in a social value function. By adding artificial fixed factors to utility and production functions, we can write the equilibrium conditions equating spending and income for each consumer entirely in terms of time-zero factor endowments and derivatives of the social value function.

Original languageEnglish (US)
Pages (from-to)1-21
Number of pages21
JournalJournal of Economic Theory
Volume50
Issue number1
DOIs
StatePublished - Feb 1990

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