ON THE EXISTENCE OF NONOPTIMAL EQUILIBRIA IN DYNAMIC-STOCHASTIC ECONOMIES

The question of the existence of a stationary equilibrium for distorte d versions of the standard neo-classical growth model is addressed in this paper. The conditions presented guaranteeing the existence of non trivial equilibrium for the class of economies under study are simple and intuitively appealing, while the existence proof developed is elem entary. Examples are given illustrating that economies with distortion al taxation, endogenous growth with externalities, and monopolistic co mpetition can all fit into the framework developed. (C) 1995 Academic Press, Inc.