A characterization of inefficiency in stochastic overlapping generations economies
In this paper, we provide a characterization of interim inefficiency in stochastic economies ofoverlapping generations under possibly sequentially incomplete markets. With respect to the established body of results in the literature, we remove the hypothesis of two-period horizons,by considering longer, though uniformly bounded, horizons for generations. The characterization exploits a suitably Modified Cass Criterion, grounded on the long-run behavior of compounded safe interest rates and independent of the length of horizons of generations. Thus, the hypothesis of two-period horizons is purely heuristic in establishing a criterion for inefficiency. In addition, for sequentially incomplete markets, we adopt a suitable notion of unambiguous inefficiency, separating the inefficient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous inefficiency reduces to inefficiency when markets are sequentially complete.
|Date of creation:||01 Dec 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
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.:
- Benveniste, Lawrence M., 1976. "A complete characterization of efficiency for a general capital accumulation model," Journal of Economic Theory, Elsevier, vol. 12(2), pages 325-337, April.
- Aliprantis, C. D. & Brown, D. J. & Polyrakis, I. A. & Werner, J., 1998.
"Portfolio dominance and optimality in infinite security markets,"
Journal of Mathematical Economics,
Elsevier, vol. 30(3), pages 347-366, October.
- Aliprantis, C. D. & D. J. Brown & I. A. Polyrakis & J. Werner, 1996. "Portfolio Dominance and Optimality in Infinite Security Markets," Discussion Paper Serie B 383, University of Bonn, Germany.
- Balasko, Yves & Shell, Karl, 1980. "The overlapping-generations model, I: The case of pure exchange without money," Journal of Economic Theory, Elsevier, vol. 23(3), pages 281-306, December.
- Cass, David, 1972. "On capital overaccumulation in the aggregative, neoclassical model of economic growth: A complete characterization," Journal of Economic Theory, Elsevier, vol. 4(2), pages 200-223, April.
- Rao Aiyagari, S. & Peled, Dan, 1991. "Dominant root characterization of Pareto optimality and the existence of optimal equilibria in stochastic overlapping generations models," Journal of Economic Theory, Elsevier, vol. 54(1), pages 69-83, June.
- Balasko, Yves & Cass, David & Shell, Karl, 1980. "Existence of competitive equilibrium in a general overlapping-generations model," Journal of Economic Theory, Elsevier, vol. 23(3), pages 307-322, December.
- Geanakoplos, J. & Polemarchakis, H., 1991. "Overlapping generations," CORE Discussion Papers 1991031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Piero Gottardi & Subir Chattopadhyay, 1999.
"- Stochastic Olg Models, Market Structure And Optimality,"
Working Papers. Serie AD
1999-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Chattopadhyay, Subir & Gottardi, Piero, 1999. "Stochastic OLG Models, Market Structure, and Optimality," Journal of Economic Theory, Elsevier, vol. 89(1), pages 21-67, November.
- Subir Chattopadhyay & Piero Gottardi, 1999. "Stochastic OLG Models, Market Structure, and Optimality," Working Papers 99-12, Brown University, Department of Economics.
- Benveniste, Lawrence M, 1986. "Pricing Optimal Distributions to Overlapping Generations: A Corollary to Efficiency Pricing [A Complete Characterization of Efficiency in a General Capital Accumulation Model]," Review of Economic Studies, Wiley Blackwell, vol. 53(2), pages 301-06, April.
- Aliprantis, C. D. & Florenzano, M. & Martins-da-Rocha, V. F. & Tourky, R., 2004.
"Equilibrium analysis in financial markets with countably many securities,"
Journal of Mathematical Economics,
Elsevier, vol. 40(6), pages 683-699, September.
- Charalambos Aliprantis & Monique Florenzano & Victor-Filipe Martins-Da-Rocha & Rabee Tourky, 2004. "Equilibrium analysis in financial markets with countably many securities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00086810, HAL.
- Tourky, Rabee & Martins-da-Rocha, Victor-Filipe & Florenzano, Monique & Aliprantis, Charalambos, 2004. "Equilibrium analysis in financial markets with countably many securities," Economics Papers from University Paris Dauphine 123456789/601, Paris Dauphine University.
- Geanakoplos, John D. & Polemarchakis, Heraklis M., 1991. "Overlapping generations," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 35, pages 1899-1960 Elsevier.
- Okuno, Masahiro & Zilcha, Itzhak, 1980. "On the Efficiency of a Competitive Equilibrium in Infinite Horizon Monetary Economies," Review of Economic Studies, Wiley Blackwell, vol. 47(4), pages 797-807, July.
- 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.
- Molina-Abraldes, Antonio & Pintos-Clapes, Juan, 2003. "A complete characterization of Pareto optimality for general OLG economies," Journal of Economic Theory, Elsevier, vol. 113(2), pages 235-252, December.
- Burke, Jonathan L., 1987. "Inactive transfer policies and efficiency in general overlapping-generations economies," Journal of Mathematical Economics, Elsevier, vol. 16(3), pages 201-222, June.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2007093. 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: (Alain GILLIS)
If references are entirely missing, you can add them using this form.