Creator

• Chari, V. V.
• Kehoe, Patrick J.

Series

• Working paper (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• 377

Date created

• 1989-02

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 rationality conditions for the government and for private agents. We provide a complete characterization of the sustainable equilibrium outcomes for a variant of Fischer's (1980) model of capital taxation. We also relate our work to recent developments in the theory of repeated games.

Subject (JEL)

• D58 - Computable and Other Applied General Equilibrium Models
• E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination

Keyword

• Game theory

Related information

• Published in Journal of Political Economy (Vol. 98, No. 4, August 1990, pp. 783-802), https://doi.org/10.1086/261706.

  An updated version of this Working Paper is available as Staff Report 122.

Alternative title

• Sustainable plans and mututal default / V. V. Chari, Patrick J. Kehoe.
• New sustainable plans / V. V. Chari, Patrick J. Kehoe.
• Sustainable plans and debt / V. V. Chari, Patrick J. Kehoe.

Date modified

• 12/07/2020

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Research Paper

DOI

•  https://doi.org/10.21034/wp.377

License

• Creative Commons BY-NC Attribution-NonCommercial 4.0 International

In Collection:

• Working Papers

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