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Tackling indeterminacy in overlapping generations models

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  • Zhigang Feng

Abstract

Overlapping generations models may have a continuum of equilibria. Previous studies have been largely confined to the local analysis that linearizes the model around the steady state. However, what is true of the linearized system only applies for an unknown-sized open neighborhood of the steady state. In this paper I develop a method to diagnose the indeterminacy in overlapping generations models by computing the set of all equilibria. I also provide a procedure to simulate the economy with indeterminate equilibrium. Copyright Springer-Verlag 2013

Suggested Citation

  • Zhigang Feng, 2013. "Tackling indeterminacy in overlapping generations models," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 77(3), pages 445-457, June.
    • Handle: RePEc:spr:mathme:v:77:y:2013:i:3:p:445-457
    DOI: 10.1007/s00186-012-0407-4
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    References listed on IDEAS

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    Cited by:

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    3. Matthew Hoelle & M. Udara Peiris, 2013. "On the Efficiency of Nominal GDP Targeting in a Large Open Economy," Purdue University Economics Working Papers 1273, Purdue University, Department of Economics.

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