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Equilibria in an overlapping generations model with transfer policies and exogenous growth

  • Jean-François Mertens
  • Anna Rubinchik

    ()

For an overlapping generations economy with varying life-cycle productivity, non-stationary endowments, continuous time starting at $$-\infty $$ (hence allowing for full anticipation), constant-returns-to-scale production and ces utility, we fully characterise equilibria where output is higher than investment, which is strictly positive. Net assets (aggregate savings minus the value of the capital stock) are constant in any equilibrium, and, for balanced growth equilibria ( bge, defined for an economy with stationary endowments), net assets are non-zero only in the golden rule equilibrium, in accord with Gale ( 1973 ). The number of bge is finite. Their parity, however, depends on the life-cycle productivity, in particular, on the relation between the intertemporal elasticity of substitution, the minimal working age and the minimal tax age. Copyright Springer-Verlag Berlin Heidelberg 2013

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Article provided by Springer in its journal Economic Theory.

Volume (Year): 54 (2013)
Issue (Month): 3 (November)
Pages: 537-595

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Handle: RePEc:spr:joecth:v:54:y:2013:i:3:p:537-595
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  15. Mertens, Jean-Francois & Rubinchik, Anna, . "Separate control over the local and the asymptotic behaviour in L_p spaces," Working Papers WP2011/1, University of Haifa, Department of Economics, revised 26 Jan 2011.
  16. MERTENS, Jean-François & RUBINCHIK, Anna, 2012. "Pareto optimality of the golden rule equilibrium in an overlapping generations model with production and transfers," CORE Discussion Papers 2012033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  19. MERTENS, Jean-François & RUBINCHIK, Anna, 2009. "Regularity and stability of equilibria in an overlapping generations model with exogenous growth," CORE Discussion Papers 2009005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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