Journal of Political Economy Vol. 98 No. 4 1990
Sustainable Plans
Abstract
We propose a definition of time-consistent policy for infinite-horizon economies with competitive private agents. Allocations and policies are defined as functions of the history of past policies. A sustainable equilibrium is a sequence of history-contingent policies and allocations that satisfy certain sequential optimality conditions for the government and for private agents. We provide a complete characterization of the sustainable equilibrium outcomes for a variant of Fischer's model of capital taxation. We also relate our work to recent developments in the theory of repeated games.
- Volume
- 98
- Issue
- 4
- Pages
- 783-802
- Sources
- bibtex:phds-export.bib