A system of non-linear functional differential equations arising in an equilibrium model of an economy with borrowing constraints (Q1182851): Difference between revisions

A model of an economy with stochastic states and infinite number of agents of two types differing in productivity is considered. Each agent consumes a single good and works in production of that good. The individuals choose how much to work, to consume and to save. The setting is more general than in the model by the third author and \textit{L. Weiss} [Econometrica 54, 23-45 (1986; Zbl 0576.90018)]. The model gives rise to a specific set of equations combining delay equations, free boundary problem and hyperbolic system features, which is in the focus of the analysis. Using a new mathematical approach allowing simulation, the existence of a solution is proved.