A characterization of Ramsey equilibrium (Q1088572)

This paper studies an intertemporal equilibrium model with one capital good, borrowing constraints and many consumers. The consumers differ in their rates of time preference. In the intertemporal equilibrium of the economy (Ramsey equilibrium) it happens that the most patient household will eventually own all of the capital in the economy! Under general conditions this kind of state of the economy is recurrent, and under additional assumptions the equilibrium path converges to the stationary equilibrium so that the turnpike property holds. An example shows that without the additional assumptions the equilibrium path may be cyclic.