A General Equilibrium Model in Which Consumption Takes Time

Cuong Le-Van (1, 2, 3) , Thi-Do-Hanh Nguyen (2) , Ngoc-Sang Pham (4) , Binh Tran-Nam (5)

1 IPAG Business School
2 CES - Centre d'économie de la Sorbonne
3 PSE - Paris School of Economics
4 Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School
5 RMIT - School of Business and Management, RMIT University Vietnam

This chapter examines a general equilibrium competitive economy with many heterogeneous agents. The key feature of the model is that consumption itself takes time so that a typical household is subject to a financial constraint as well as a time constraint. Using the dividend approach proposed by Le-Van and Nguyen (J Math Econ 43:135−152, 2007), it is shown that the economy possesses at least one autarkic Walrasian equilibrium. Sufficient conditions for the uniqueness of the autarkic equilibrium are then derived. Finally, a specific example is provided to illustrate the working of the model, including the derivation of the equilibrium labour allocation and some comparative static results.

Keywords: General equilibrium; Heterogeneous households; Quasi-equilibrium; Dividend approach

Domains: Humanities and Social Sciences; Economics and Finance

Cuong Le-Van, Thi-Do-Hanh Nguyen, Ngoc-Sang Pham, Binh Tran-Nam. A General Equilibrium Model in Which Consumption Takes Time. Tran-Nam Binh; Tawada Makoto; Okawa Masayuki. Recent Developments in Normative Trade Theory and Welfare Economics. New Frontiers in Regional Science: Asian Perspectives, 26, Springer, Singapore, pp.97-124, 2018, 978-981-10-8614-4. ⟨10.1007/978-981-10-8615-1_7⟩. ⟨hal-03260818⟩