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Sustainable Plans

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  • V. V. Chari
  • Patrick J Kehoe

Abstract

The authors 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. The authors provide a complete characterization of the sustainable equilibrium outcomes for a variant of Stanley Fischer's model of capital taxation. They also relate their work to recent developments in the theory of repeated games. Copyright 1990 by University of Chicago Press.
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Suggested Citation

  • V. V. Chari & Patrick J Kehoe, 1998. "Sustainable Plans," Levine's Working Paper Archive 600, David K. Levine.
    • Handle: RePEc:cla:levarc:600
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    References listed on IDEAS

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