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Fluctuations in Overlapping Generations Economies

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  • Mich Tvede

    (Department of Economics, University of Copenhagen)

Abstract

In the present paper stationary pure-exchange overlapping generations economies with l goods per date and m consumers per generation are considered. It is shown that for an open and dense set of utility functions there exist endowment vectors such that n-cycles exist for n ≤ l +1 and l ≤ m. The approach to existence of endogenous fluctuations is basic in the sense that the prime ingredients are the implicit function theorem and linear algebra. Moreover the approach is applied to show that for an open and dense set of utility functions there exist endowment vectors such that sunspot equilibria, where prices at every date only depends on the state at that date, exist.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 09-05.

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Length: 17 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:kud:kuiedp:0905

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Keywords: cycles; overlapping generations economies; sunspot equilibria;

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  1. Jullien, Bruno, 1988. "Competitive business cycles in an overlapping generations economy with productive investment," Journal of Economic Theory, Elsevier, Elsevier, vol. 46(1), pages 45-65, October.
  2. T. J. Kehoe & D. K. Levine, 1983. "Regularity in Overlapping Generations Exchange Economies," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 314, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Christian Ghiglino & Mich Tvede, 1993. "Endowments, Stability and Fluctuations in OG Models," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva, Institut d'Economie et Econométrie, Université de Genève 93.04, Institut d'Economie et Econométrie, Université de Genève.
  4. Grandmont Jean-michel, 1983. "On endogenous competitive business cycles," CEPREMAP Working Papers (Couverture Orange) 8316, CEPREMAP.
  5. Benhabib, Jess & Laroque, Guy, 1986. "On Competitive Cycles in Productive Economies," Working Papers, C.V. Starr Center for Applied Economics, New York University 86-19, C.V. Starr Center for Applied Economics, New York University.
  6. Azariadis, Costas, 1981. "Self-fulfilling prophecies," Journal of Economic Theory, Elsevier, Elsevier, vol. 25(3), pages 380-396, December.
  7. Reichlin, Pietro, 1986. "Equilibrium cycles in an overlapping generations economy with production," Journal of Economic Theory, Elsevier, Elsevier, vol. 40(1), pages 89-102, October.
  8. Julio DÂvila, 1997. "Sunspot fluctuations in dynamics with predetermined variables," Economic Theory, Springer, Springer, vol. 10(3), pages 483-495.
  9. Azariadis, Costas & Guesnerie, Roger, 1986. "Sunspots and Cycles," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(5), pages 725-37, October.
  10. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, Elsevier, vol. 6(1), pages 12-36, February.
  11. Citanna, Alessandro & Siconolfi, Paolo, 2007. "Short-memory equilibrium in stochastic overlapping generations economies," Journal of Economic Theory, Elsevier, Elsevier, vol. 134(1), pages 448-469, May.
  12. Sorger, Gerhard, 1994. "On the Structure of Ramsey Equilibrium: Cycles, Indeterminacy, and Sunspots," Economic Theory, Springer, Springer, vol. 4(5), pages 745-64, August.
  13. Boldrin, Michele & Montrucchio, Luigi, 1986. "On the indeterminacy of capital accumulation paths," Journal of Economic Theory, Elsevier, Elsevier, vol. 40(1), pages 26-39, October.
  14. Benhabib, Jess & Day, Richard H., 1982. "A characterization of erratic dynamics in, the overlapping generations model," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 4(1), pages 37-55, November.
  15. Davila, J., 1994. "Sunspot fluctuations and Dynamics with Memory," DELTA Working Papers, DELTA (Ecole normale supérieure) 94-14, DELTA (Ecole normale supérieure).
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