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Journal of Applied Mathematics
Volume 2014, Article ID 482314, 16 pages
http://dx.doi.org/10.1155/2014/482314
Research Article

The Long-Run Behavior of Consumption and Wealth Dynamics in Complete Financial Market with Heterogeneous Investors

Department of Economics, Texas A&M University, College Station, TX 77843, USA

Received 8 February 2014; Revised 19 June 2014; Accepted 24 June 2014; Published 14 July 2014

Academic Editor: Juan Manuel Peña

Copyright © 2014 Darong Dai. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

A type of complete financial market with finite and countable heterogeneous investors, that is, investors equipped with heterogeneous elasticities of intertemporal substitution, heterogeneous time discount rates, and also heterogeneous beliefs, is constructed and two main results are established. First, long-run behaviors, specifically golden rules or modified golden rules, about consumption path and wealth accumulation are investigated under uncertainty and in the sense of uniform topology. Second, inefficacy of temporary taxation policies, which are chosen to be consumption tax and wealth tax, is confirmed in the current financial market.