Barbie, Martin ORCID: 0000-0001-9578-3594 and Hillebrand, Marten (2018). Bubbly Markov equilibria. Econ. Theory, 66 (3). 627 - 680. NEW YORK: SPRINGER. ISSN 1432-0479

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Abstract

Bubbly Markov equilibria (BME) are recursive equilibria on the natural state space which admit a non-trivial bubble. The present paper studies the existence and properties of BME in a general class of overlapping generations economies with capital accumulation and stochastic production shocks. Using monotone methods, we develop a general approach to construct Markov equilibria and provide necessary and sufficient conditions for these equilibria to be bubbly. Our main result shows that a BME exists whenever the bubbleless equilibrium is Pareto inefficient due to either overaccumulation of capital or inefficient risk sharing between generations.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Barbie, MartinUNSPECIFIEDorcid.org/0000-0001-9578-3594UNSPECIFIED
Hillebrand, MartenUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-171216
DOI: 10.1007/s00199-017-1082-8
Journal or Publication Title: Econ. Theory
Volume: 66
Number: 3
Page Range: 627 - 680
Date: 2018
Publisher: SPRINGER
Place of Publication: NEW YORK
ISSN: 1432-0479
Language: English
Faculty: Faculty of Management, Economy and Social Sciences
Subjects: Economics
Uncontrolled Keywords:
KeywordsLanguage
OVERLAPPING-GENERATIONS MODEL; STOCHASTIC OLG MODELS; INFINITE-HORIZON ECONOMIES; STEADY-STATE EQUILIBRIUM; NONCLASSICAL PRODUCTION; DYNAMIC INEFFICIENCY; CAPITAL ACCUMULATION; SOCIAL-SECURITY; ASSET BUBBLES; EXISTENCEMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/17121

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