Ramsey Equilibrium in a Two-Sector Model with Heterogeneous Households

  title={Ramsey Equilibrium in a Two-Sector Model with Heterogeneous Households},
  author={Robert A. Becker and Eugene N. Tsyganov},
  journal={J. Economic Theory},
We prove an existence theorem for a stationary perfect foresight equilibrium under borrowing constraints in a two-sector model with infinitely lived heterogeneous agents. The most patient agent holds all the capital in this solution. We also show that if the capital goods sector is capital intensive and capital income is increasing in the aggregate capital stock, then the aggregate capital stock eventually is monotonic and converges to the steady state stock. If the consumption goods sector is… CONTINUE READING
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