Optimality and monetary equilibria in stationary overlapping generations models with long-lived agents: Growth versus discounting
AbstractThis paper studies the relationship between the existence and optimality of a monetary steady-state and the nonoptimality of nonmonetary steady-states. We construct a sequence of stationary overlapping generations economies with longer and longer lived generations in which all agents maximize a discounted sum of utilities with a common discount rate. Under some assumptions the following result is established: If the discount rate is greater (less) than the population growth rate, then eventually every nonmonetary steady-state is optimal (non-optimal) and a monetary steady-state does not exist (exists and is optimal).
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 43 (1987)
Issue (Month): 2 (December)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- S. Rao Aiyagari, 1986. "Optimality and monetary equilibria in stationary overlapping generations models with long lived agents: growth versus discounting," Working Papers 312, Federal Reserve Bank of Minneapolis.
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