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The Global Stability of Efficient Intertemporal Allocations
Larry G. Epstein
Abstract
This paper describes a continuous time model of an economy with finitely many infinitely lived consumers and a finite number of capital goods. Two objectives are achieved. First, recursive (nonadditive) utility functionals are formulated and analyzed. Second, these preference functionals are applied to analyze the nature of efficient allocations in a dynamic economy. Two classes of global turnpike propositions are proven which provide the basis for a model of the long-run distribution of wealth. These propositions also provide new perspective regarding existing stability literature based on additive utilities.
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