RECURSIVE EQUILIBRIA IN AN AIYAGARI‐STYLE ECONOMY WITH PERMANENT INCOME SHOCKS
证明了存在永久收入冲击的艾亚加里型经济中递归竞争均衡的存在性，发现借贷约束从不收紧的均衡，并给出均衡利率的非平凡下界，为时间迭代算法提供理论基础。
We prove existence of a recursive competitive equilibrium (RCE) for an Aiyagari‐style economy with permanent income shocks and derive important economic implications. We show that there exist equilibria where borrowing constraints are never binding and establish a nontrivial lower bound on the equilibrium interest rate. These results imply distinct consumption dynamics compared to existing studies. We present a new approach to solve the agent's problem that uses lattices of consumption functions to deal with permanent income shocks and an unbounded utility function. The approach provides a theoretical foundation for convergence of the time iteration algorithm widely used in applied work.