Ramsey equilibrium in a two-sector model with heterogeneous households (Q697977)

The paper proves an existence theorem for a unique stationary Ramsey equilibrium under borrowing constraints in a two-sector model with infinitely lived heterogeneous agents. It is shown that the most patient agent holds all the capital in this solution. It is also shown that if the capital goods sector is capital intensive and capital income is increasing in the aggregate capital stock, then the aggregate capital stock is eventually monotonic and converges to the steady state stock. Moreover, the convergence to the steady state under more restrictive conditions is proved, in case that the consumption goods sector is more capital intensive and, the capital income is increasing in aggregate capital. Finally, it is shown that periodic equilibria exist under weaker hypotheses.