Dynamic Efficiency in the Two-Sector Overlapping Generations Model
AbstractThis paper examines dynamic efficiency in the context of a two-sector overlappinggenerations model. First, conditions for dynamic efficiency in a centrally planned economy arederived. Then, in a competitive environment, the implications of dynamic (in)efficiency for thesteady state relative price and steady state welfare are demonstrated. For the special case of alog-linear world, the golden rule savings rate is identified along with restrictions on parametersthat yield dynamically efficient steady states. The results are further demonstrated via awelfare analysis of a simple tax/subsidy scheme.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34856.
Date of creation: 27 Jan 2006
Date of revision:
Publication status: Published in Journal of Economic Dynamics and Control 2006, vol. 30 no. 11, pp. 1915-1936
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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dynamic efficiency; overlapping generations model; Two-Sector;
Find related papers by JEL classification:
- D9 - Microeconomics - - Intertemporal Choice
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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- Jean-Pierre Drugeon & Carine Nourry & Alain Venditti, 2009.
"On efficiency and local uniqueness in two-sector OLG economies,"
UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers)
- Drugeon, Jean-Pierre & Nourry, Carine & Venditti, Alain, 2010. "On efficiency and local uniqueness in two-sector OLG economies," Mathematical Social Sciences, Elsevier, vol. 59(1), pages 120-144, January.
- Carine Nourry & Alain Venditti, 2009.
"Local indeterminacy under dynamic efficiency in a two-sector overlapping generations economy,"
- Nourry, Carine & Venditti, Alain, 2011. "Local indeterminacy under dynamic efficiency in a two-sector overlapping generations economy," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 164-169, March.
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