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Competitive Growth In A Life-Cycle Model: Existence And Dynamics

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Author Info
Hippolyte d'Albis
Emmanuelle Augeraud-véron

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Abstract

The dynamic behavior of the capital growth rate is analyzed using an overlapping-generations model with continuous trading. Assuming a technology satisfying constant social returns to capital, the equilibrium growth rate is piecewise-defined by functional differential equations with both delayed and advanced terms. The main result concerns the existence of a solution expressed as a series of exponentials, which is shown to crucially depend on the initial wealth distribution among cohorts. Upon existence, the dynamics of the capital growth rate has a saddle-point trajectory that converges to a unique steady state. Along the transition path, the growth rate exhibits exponentially decreasing oscillations. Copyright © (2009) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-2354.2009.00537.x
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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 50 (2009)
Issue (Month): 2 (05)
Pages: 459-484
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Handle: RePEc:ier:iecrev:v:50:y:2009:i:2:p:459-484

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. D'ALBIS Hippolyte & AUGERAUD-VERON Emmanuelle, 2007. "Endogenous Retirement and Monetary Cycles," Working Papers 07.14.235, LERNA, University of Toulouse. [Downloadable!]
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