Goenka, Aditya and Nguyen, Manh-Hung (2020) General existence of competitive equilibrium in the growth model with an endogenous labor-leisure choice. Journal of Mathematical Economics, 91. pp. 90-98.

[thumbnail of equilibrium.pdf]
Download (368kB) | Preview
Identification Number : 10.1016/j.jmateco.2020.08.004


We prove the existence of competitive equilibrium in the canonical optimal growth
model with elastic labor supply under general conditions. In this model, strong
conditions to rule out corner solutions are often not well justied. We show using
a separation argument that there exist Lagrange multipliers that can be viewed
as a system of competitive prices. Neither Inada conditions, nor strict concavity,
nor homogeneity, nor dierentiability are required for existence of a competitive
equilibrium. Thus, we cover important specications used in the macroeconomics
literature for which existence of a competitive equilibrium is not well understood.
We give examples to illustrate the violation of the conditions used in earlier existence
results but where a competitive equilibrium can be shown to exist following the
approach in this paper.

Item Type: Article
Language: English
Date: December 2020
Refereed: Yes
Uncontrolled Keywords: Optimal growth, Competitive equilibrium, Lagrange multipliers, Elastic la-, bor supply, Inada conditions.
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Sep 2020 14:18
Last Modified: 27 Oct 2021 13:38
OAI Identifier: oai:tse-fr.eu:124656
URI: https://publications.ut-capitole.fr/id/eprint/41769
View Item


Downloads per month over past year