IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Existence and stability of equilibria in OLG models under adaptive expectations

  • Michele Longo

    ()

    (Dipartimento di Discipline matematiche, Finanza Matematica ed Econometria - Universita' Cattolica del Sacro Cuore)

  • Vincenzo Valori

    ()

    (Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze)

In this paper we deal with an Overlapping Generations Model with production under three diverse assumptions about agents rationality; rational, adaptive and myopic expectations. We determine a uniqueness condition for stationary steady states in the model with perfect foresight which rests on the second derivatives of the production and utility functions. Such condition results to be more restrictive than the one developed for the model with myopic expectations which, due to the correspondence among steady states of the three models, could be considered as an alternative. Further, we completely develop the analysis of the model under adaptive expectations. We derive stability conditions and determine the bifurcation diagram in all the three cases. From the comparison it results that stability conditions for the case with rational expectations are less restrictive than for both adap- tive and myopic ones. We notice that, differently from what happens in the OLG model of pure exchange, the adaptive expectations do not improve local stability performances of the model with respect to myopic expectations; this is due to the fact that in our two-dimensional model a Neimark-Hopf bifurcation could arise, cutting off part of the parameter space which results to be stable in the myopic case.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.disei.unifi.it/upload/sub/pubblicazioni/repec/flo/workingpapers/storicodimad/2001/dimadwp2001-01.pdf
Download Restriction: no

Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Mathematical Economics with number 2001-01.

as
in new window

Length: 35 pages
Date of creation: May 2001
Date of revision:
Handle: RePEc:flo:wpaper:2001-01
Contact details of provider: Postal: Via delle Pandette 9 50127 - Firenze - Italy
Phone: +39 055 2759707
Fax: +39 055 2759913
Web page: http://www.disei.unifi.it/
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:flo:wpaper:2001-01. 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: (Michele Gori)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.