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The Unit Root Property And Optimality: A Simple Proof

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Author Info
Subir Chattopadhyay (Universidad de Alicante)
Abstract

Consider a pure exchange OLG economy under stationary Markov uncertainty with one good and with sequentially complete markets. It is known that an interior stationary equilibrium allocation at which the agents common matrix of intertemporal rates of substitution has a Perron root which is less than or equal to one is conditionally Pareto optimal. We provide a simple and direct proof of this fact.

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File URL: http://www.ivie.es/downloads/docs/00/wpad-31.pdf
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File Function: Fisrt version / Primera version, 2000
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2000-31.

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Length: 13 pages
Date of creation: Dec 2000
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2000-31

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Keywords: Stochastic Overlapping Generations Models; Pareto Optimality.;

References listed on IDEAS
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. Chattopadhyay, Subir & Gottardi, Piero, 1999. "Stochastic OLG Models, Market Structure, and Optimality," Journal of Economic Theory, Elsevier, vol. 89(1), pages 21-67, November. [Downloadable!] (restricted)
    Other versions:
  2. Rao Aiyagari, S. & Peled, Dan, 1991. "Dominant root characterization of Pareto optimality and the existence of optimal equilibria in stochastic overlapping generations models," Journal of Economic Theory, Elsevier, vol. 54(1), pages 69-83, June. [Downloadable!] (restricted)
  3. Zilcha, Itzhak, 1991. "Characterizing efficiency in stochastic overlapping generations models," Journal of Economic Theory, Elsevier, vol. 55(1), pages 1-16, October. [Downloadable!] (restricted)
  4. Gabrielle Demange & Guy Laroque, 1999. "Social Security and Demographic Shocks," Econometrica, Econometric Society, vol. 67(3), pages 527-542, May.
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  5. Cass, David, 1972. "On capital overaccumulation in the aggregative, neoclassical model of economic growth: A complete characterization," Journal of Economic Theory, Elsevier, vol. 4(2), pages 200-223, April. [Downloadable!] (restricted)
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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. Subir Chattopadhyay, 2001. "Long-Lived Assets, Incomplete Markets, And Optimality," Working Papers. Serie AD 2001-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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