Abstract
Non-convexities and discrete choices have become important modeling tools in modern macroeconomics. Unfortunately, the existence of competitive equilibria in the presence of such non-convexities is not always ensured, and most results on the existence of equilibrium that can be found in the literature do not directly apply to models used in applications.In this paper, we explain the three main difficulties one encounters when proving the existence and give simple sufficient conditions for the existence of competitive equilibria in stochastic OLG models with non-convex budget sets. We also give sufficient conditions for the existence of approximate equilibria that are recursive in the natural state.
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