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Article: Limits to Redistribution and Intertemporal Wedges: Implications of Pareto Optimality with Private Information
- Article from:
- Economic Quarterly - Federal Reserve Bank of Richmond
- Article date:
- April 1, 2008
- Author:
CopyrightCopyright Federal Reserve Bank of Richmond Spring 2008. Provided by ProQuest LLC. (Hide copyright information)
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(ProQuest: ... denotes formulae omitted.)
Traditionally an object of interest in microeconomics, models with privately informed agents have recently been used to study numerous topics in macroeconomics.1 Characterization of Pareto-optimal allocations is an essential step in these studies, because the structure of optimal institutions of macroeconomic interest depends on the structure of optimal allocations. In models with privately informed agents, however, characterization of optimal allocations is a complicated problem, relative to models in which all relevant information is publicly available, especially in dynamic settings with heterogenous agents, which are of particular interest in ...