The local dynamics of efficient allocations are studied for heterogeneous-agent economies with production where preferences are recursive but not time-separable. In the case of a one-sector neoclassical technology, it is shown that optimal trajectories locally converge to a unique steady state, provided that every agent's utility satisfies normality and increasing marginal impatience conditions. In the two-sector case, with the above restrictions on preferences, it is shown that oscillations can result only if the consumption goods sector is sufficiently capital intensive.
ASJC Scopus subject areas
- Economics and Econometrics