Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72281
Authors: 
Espino, Emilio
Year of Publication: 
2004
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 154
Abstract: 
In his seminal paper of 1928, Ramsey conjectured that if agents discounted the future differently, in the long run all agents except the most patient would live at the subsistence level. The validity of this conjecture was investigated in different environments. In particular, it has been confirmed in the neoclassical growth model with dynamically complete markets. This paper studies this conjecture in a version of this model that includes private information and heterogeneous agents. A version of Bayesian Implementation is introduced and a recursive formulation of the original allocation problem is established. Efficient allocations are renegotiation-proof and the expected utility of any agent cannot go to zero with positive probability if the economy does not collapse. If the economy collapses all agents will get zero consumption forever. Thus, including any degree of private information in the neoclassical growth model will deny Ramsey's conjecture, if efficient allocations are considered.
Subjects: 
dynamic contracts
capital accumulation
private information
JEL: 
C61
D82
D90
D61
D31
Document Type: 
Working Paper

Files in This Item:
File
Size
463.43 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.