DEPOCEN Working Paper Series
Cuong Le Van, Ngoc Sang Pham, 2014. "Intertemporal equilibrium with fi nancial asset and physical capital"
We build an in nite-horizon dynamic deterministic general equilibrium model with imperfect market (borrowing constraint) in which heterogenous agents invest in capital or nancial asset, work and consume, a representative rm maximizes pro t. Firstly, the existence of intertemporal equilibrium is proved even if aggregate capital is not uniformly bounded. Secondly, we de ne and study nancial bubble and physical bub- ble. Both nancial and physical bubbles may occur but they can not occur at the same time. Lastly, we study impact of physical productivity and nancial dividend on the physical market which we call "the race between productivity and dividend".
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