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Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital

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  • Galor, Oded
  • Ryder, Harl E.

Abstract

This paper analyzes the existence, uniqueness, and stability of a steady-state equilibrium in an overlapping-generations model with productive capital. It is shown that for any feasible set of well-behaved preferences there exists a production function that satisfies the Inada conditions under which the economy experiences global contraction and the steady-state equilibrium is characterized by the absence of production and consumption. The study establishes a strengthened Inada condition which is necessary to preclude global contraction. and sufficient conditions for the existence of a unique and globally stable non-trivial steady-state equilibrium.
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  • Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
  • Handle: RePEc:eee:jetheo:v:49:y:1989:i:2:p:360-375
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