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Barbie, Martin and Hillebrand, Marten (2018). Bubbly Markov equilibria. Econ. Theory, 66 (3). S. 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:	Creators Email ORCID ORCID Put Code Barbie, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Hillebrand, Marten UNSPECIFIED UNSPECIFIED UNSPECIFIED
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:	S. 627 - 680
Date:	2018
Publisher:	SPRINGER
Place of Publication:	NEW YORK
ISSN:	1432-0479
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language OVERLAPPING-GENERATIONS MODEL; STOCHASTIC OLG MODELS; INFINITE-HORIZON ECONOMIES; STEADY-STATE EQUILIBRIUM; NONCLASSICAL PRODUCTION; DYNAMIC INEFFICIENCY; CAPITAL ACCUMULATION; SOCIAL-SECURITY; ASSET BUBBLES; EXISTENCE Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/17121