This notes shows how intertemporal and cross-section welfare are related in a general class of stochastic continuous time models. In the steady state intertemporal welfare is shown to be proportional to cross-sectional income. This result holds for economies where each agent maximizes his own expected discounted utility. That is, we do not assume that aggregate utility is maximized. We provide an application to search in the labor market and one to pollution externalities.
|Place of Publication||Tilburg|
|Number of pages||15|
|Publication status||Published - 2000|
|Name||CentER Discussion Paper|