On Ramsey equilibrium with dependent preferences
Résumé
This paper introduces consumption externalities in a one-sector Ramsey economy featuring heterogeneous households and borrowing constraints. Externalities are taken into account by writing that the felicity functions depend upon the consumption of all the households in the economy. Focusing on the class of equilibria in which the most patient household owns the whole capital stock, it is proved that there exist non-convergent Ramsey equilibria even though the Maximum Income Monotonicity (MIM) condition holds.
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