Rational expectations equilibria in a Ramsey model of optimal growth with non-local spatial externalities (Q781649)

This article is a contribution to the important topic -- infinite horizon spatial optimal growth models under the influence of external factors. In these models a natural research question is the existence of a rational-expectations-equilibrium (REE). The author's research is related to the formation of REE in a general class of spatial economic models under the effect of externalities. Using precise estimates for a parametric optimisation problem, formulated according to Ramsey's model the existence of REE is proved via a basic theorem from the area of fixed point theory. The reader can find a detailed discussion on important issues related to the existence of rational expectations equilibria and their characterisation in terms of the Euler-Lagrange equation, sustainability and stability of the solution with the proposed model (see Section 5).