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Equilibria in an overlapping generations model with transfer policies and exogenous growth

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  • Jean-François Mertens
  • Anna Rubinchik

    ()

Abstract

For an overlapping generations economy with varying life-cycle productivity, non-stationary endowments, continuous time starting at $$-\infty $$ (hence allowing for full anticipation), constant-returns-to-scale production and ces utility, we fully characterise equilibria where output is higher than investment, which is strictly positive. Net assets (aggregate savings minus the value of the capital stock) are constant in any equilibrium, and, for balanced growth equilibria ( bge, defined for an economy with stationary endowments), net assets are non-zero only in the golden rule equilibrium, in accord with Gale ( 1973 ). The number of bge is finite. Their parity, however, depends on the life-cycle productivity, in particular, on the relation between the intertemporal elasticity of substitution, the minimal working age and the minimal tax age. Copyright Springer-Verlag Berlin Heidelberg 2013

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 54 (2013)
Issue (Month): 3 (November)
Pages: 537-595

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Handle: RePEc:spr:joecth:v:54:y:2013:i:3:p:537-595

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Related research

Keywords: Infinite economies; Overlapping generations; Exogenous growth; D50; E20;

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Cited by:
  1. Mertens, Jean-François & Rubinchik, Anna, 2014. "Essential properties of Lp,q spaces (the amalgams) and the implicit function theorem for equilibrium analysis in continuous time," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 187-196.
  2. MERTENS, Jean-François & RUBINCHIK, Anna, 2012. "Pareto optimality of the golden rule equilibrium in an overlapping generations model with production and transfers," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2012033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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