45 research outputs found
Endogenized Production Sets in a General Equilibrium Model with Incomplete Markets
Get PDFThe paper develops a general equilibrium model with incomplete markets where the asset structure is endogenized. This asset structure allows to consider a new class of objective functions of profit maximizing firms. This class of objective functions is independent of the utilities of the stock holders. Corporate equilibrium properties are studied for this model. It is shown that the organization of production is generally efficient. This result is a consequence of the generalization of the separation theorem of the Arrow-Debreu model to incomplete markets. Finally, the paper shows that corporate equilibria are not independent of the firms financial activities.
Corporate Equilibrium Properties of a Centralized Objective Function GEI Model
Get PDFWe introduce an incomplete markets general equilibrium model with idiosyncratic risk, where production is financed via stock market, and where the ownership structure endogenized. This model is a variation of Drèze (1974), Grossman and Hart (1979), and Magill and Quinzii (2002). The paper discusses two main corporate equilibrium properties. It shows that (i) the class of centralized objective functions introduces a further source of inefficiency into the organization of production, and (ii) the indeterminacy of corporate equilibria. (iii) It further shows the separation of the economic decisions of the agents.
Switching Regimes in Economics:The Contraction Mapping and the ω-Limit Set
Get PDFThis paper considers a dynamical system defined by a set of ordinary auto- nomous differential equations with discontinuous right-hand side. Such sys- tems typically appear in economic modelling where there are two or more re- gimes with a switching between them. Switching between regimes may be a consequence of market forces or deliberately forced in form of policy imple- mentation. Stiefenhofer and Giesl [1] introduce such a model. The purpose of this paper is to show that a metric function defined between two adjacent tra- jectories contracts in forward time leading to exponentially asymptotically stability of (non)smooth periodic orbits. Hence, we define a local contraction function and distribute it over the smooth and nonsmooth parts of the peri- odic orbits. The paper shows exponentially asymptotical stability of a periodic orbit using a contraction property of the distance function between two adja- cent nonsmooth trajectories over the entire periodic orbit. Moreover it is shown that the ω-limit set of the (non)smooth periodic orbit for two adjacent initial conditions is the same
Existence of Financial Equilibria in a General Equilibrium Model with Piece-Wise Smooth Production Manifolds
Get PDF
Endogenous Asset Formation: Production in General Equilibrium with Incomplete Markets
Get PDFThis thesis considers production in a two period general equilibrium model with incomplete markets. Long and short run production sets are considered. Long run production sets imply that, capital, raised by each firm through issuing stocks, is endogenized. We show that for any feasible combination of capital, equilibrium always exists. A main property of the model considered is that the efficient boundary of the production set available to each firm is not independent of its financial activities. This links the real with the financial sector of the economy.
Equilibrium properties beyond existence of equilibrium include the separation of the activities of the agents, the efficient organization of production, and the determinateness of real equilibria
