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Altruism and Determinacy of Equilibria in Overlapping Generations Models with Externalities

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  • Alain Venditti

Abstract

This paper deals with an OLG model with production and a single commodity, in which agents are assumed altruistic and the aggregate production function contains external effects. I prove that, if the technology satisfies a minor assumption, which encompasses positive and negative externalities, some curvature conditions on the utility function ensure local determinacy of stationary and period 2 equilibria. I prove that non‐separable, strictly concave preferences are a fundamental ingredient for the occurrence of indeterminate equilibria. Finally, considering the case of unbounded growth, I establish that for any utility and production functions a unique balanced growth path is globally determinate. JEL Classification Numbers: C62, E32

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  • Alain Venditti, 2003. "Altruism and Determinacy of Equilibria in Overlapping Generations Models with Externalities," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 179-202, June.
    • Handle: RePEc:bla:jecrev:v:54:y:2003:i:2:p:179-202
    DOI: 10.1111/1468-5876.t01-1-00253
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    References listed on IDEAS

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    1. Lisa Morhaim & Charles-Henri Dimaria & Cuong Le Van, 2002. "The discrete time version of the Romer model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(1), pages 133-158.
    2. Drugeon, J.-P., 2000. "On Factors Substitutability and the Production Possibility Frontier in Multi-sectoral Economies," Papiers d'Economie Mathématique et Applications 2000.124, Université Panthéon-Sorbonne (Paris 1).
    3. Drugeon, J.P., 2000. "On the "Equilibrium Production Possibility Frontier", Factors Substitutability and the Irrelevance of Returns to Scale for the Emergence of Local Indeterminacies in Multi-Sectoral Economies," Papiers d'Economie Mathématique et Applications 2000.125, Université Panthéon-Sorbonne (Paris 1).
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    Cited by:

    1. Thomas Seegmuller, 2005. "Steady state analysis and endogenous fluctuations in a finance constrained model," Cahiers de la Maison des Sciences Economiques v05029, Université Panthéon-Sorbonne (Paris 1).

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    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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