On the Structure of Ramsey Equilibrium: Cycles, Indeterminacy, and Sunspots.

We consider a one-sector neoclassical capital accumulation model under borrowing constraints with infinitely lived heterogeneous households. Under the standard assumptions of strictly concave and time-additive utility functionals and a strictly concave production function, we show that perfect foresight equilibria can be non-unique, even locally non-unique (indeterminate), and periodic of arbitrary long period rho. Moreover, we prove that there can exist non-trivial rational expectations (sunspot) equilibria when the agent's expectations about future factor prices depend on extrinsic uncertainty.