Reducing Overlapping Generations Economies to Finite Economies
This paper establishes an identification of stationary equilibria of an infinite-horizon economy and equilibria of a naturally related finite economy. More specifically, the connection is established, firstly, between cycles of an overlapping generations economy and the equilibria of a finite economy with a cyclical structure. Such connection is then extended to hold also when extrinsic uncertainty is introduced in the models. In order to obtain the adequate counterpart of the connection once the extrinsic uncertainty is introduced, we are lead to consider in the overlapping generations framework sunspot equilibria of a broad class, called here sunspot cycles. The previous connections between the equilibria of the two frameworks, with and without sunspots, are used to show that: a) overlapping generations economies allowing for heterogeneity across generations typically fluctuate aperiodically for arbitrarily long periods of time, while nevertheless being able to exhibit an approximate cyclical behavior during those periods and b) the presence of asymmetric information on an extrinsic uncertainty may induce continua of equilibria in finite economies.
(This abstract was borrowed from another version of this item.)
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grandmont, Jean-Michel, 1985.
"On Endogenous Competitive Business Cycles,"
Econometric Society, vol. 53(5), pages 995-1045, September.
- Maskin, Eric & Tirole, Jean, 1987. "Correlated equilibria and sunspots," Journal of Economic Theory, Elsevier, vol. 43(2), pages 364-373, December.
- Chiappori, P.A. & Guesnerie, R., 1990.
"Sunspot Equilibria in Sequential Markets Models,"
DELTA Working Papers
90-05, DELTA (Ecole normale supérieure).
- Balasko Yves & Ghiglino Christian, 1995.
"On the Existence of Endogenous Cycles,"
Journal of Economic Theory,
Elsevier, vol. 67(2), pages 566-577, December.
- Julio Dávila & Piero Gottardi & Atsushi Kajii, 2007.
"Local Sunspot Equilibria Reconsidered,"
Springer, vol. 31(3), pages 401-425, June.
- Debreu, Gerard, 1970.
"Economies with a Finite Set of Equilibria,"
Econometric Society, vol. 38(3), pages 387-92, May.
- Forges, Francoise & Peck, James, 1995.
"Correlated Equilibrium and Sunspot Equilibrium,"
Springer, vol. 5(1), pages 33-50, January.
- Forges, F., 1991. "Correlated equilibrium and sunspot equilibrium," CORE Discussion Papers 1991053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Forges, F. & Peck, J., . "Correlated equilibrium and sunspot equilibrium," CORE Discussion Papers RP -1140, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cass, David & Shell, Karl, 1983. "Do Sunspots Matter?," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 193-227, April.
- Chiappori, P.A. & Geoffard, P.Y. & Guesnerie, R., 1990.
"Sunspot Fluctuations around a Steady State: The Case of Multidimensional One-Step forward Looking Economic Models,"
DELTA Working Papers
90-02, DELTA (Ecole normale supérieure).
- Chiappori, Pierre-Andre & Geoffard, Pierre-Yves & Guesnerie, Roger, 1992. "Sunspot Fluctuations around a Steady State: The Case of Multidimensional, One-Step Forward Looking Economic Models," Econometrica, Econometric Society, vol. 60(5), pages 1097-126, September.
- Davila, J., 1999. "The Connection Between Correlated and Sunspot Equilibria Revisited," Papiers d'Economie MathÃ©matique et Applications 1999.78, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Azariadis, Costas & Guesnerie, Roger, 1986. "Sunspots and Cycles," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 725-37, October.
- Guesnerie, Roger, 1986. "Stationary sunspot equilibria in an N commodity world," Journal of Economic Theory, Elsevier, vol. 40(1), pages 103-127, October.
- Jan Tuinstra & Claus Weddepohl, 1999. "On the equivalence between the overlapping-generations model and cyclical general-equilibrium models," Journal of Economics, Springer, vol. 70(2), pages 187-207, June.
When requesting a correction, please mention this item's handle: RePEc:cla:penntw:9819996a2b80f99a81bf1509ce240171. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine)
If references are entirely missing, you can add them using this form.