Report
Sustainable plans
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.
https://doi.org/10.21034/sr.122
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Provider: Federal Reserve Bank of Minneapolis
Part of Series: Staff Report
Publication Date: 1989
Number: 122