Time and Uncertainty in Overlapping Generations Economies
This paper shows the general reversibility of every perfect foresight equilibrium of an overlapping generations economy. It then shows and characterizes the existence of reversible sunspot equilibria in these economies as well, which seems to be at odds with our intuition about the irreversibility of a tree of events. Although the paper establishes also that such reversible stochastic equilibria constitute a negligible subset of all the equilibria of their class, their mere existence may be considered somewhat puzzling for this intuition. Journal of Economic Literature
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- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
- Julio Davila, 1997. "Sunspot Equilibria in Dynamics with Predetermined Variables," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00286029, HAL.
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