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Competitive Growth in a Life-cycle Model: Existence and Dynamics

  • Hippolyte D'Albis

    ()

    (TSE - Toulouse School of Economics - Toulouse School of Economics, LERNA - Economie des Ressources Naturelles - INRA : UR1081 - CEA : DPG - Université des Sciences Sociales - Toulouse I)

  • Emmanuelle Augeraud-Véron

    ()

    (MIA - Mathématiques, Image et Applications - Université de La Rochelle : EA3165)

The dynamic behavior of the capital growth rate is analyzed using an overlapping-generations model with continuous trading. Assuming a technology satisfying constant social returns to capital, the equilibrium growth rate is piecewise-defined by functional differential equations with both delayed and advanced terms. The main result concerns the existence of a solution expressed as a series of exponentials, which is shown to crucially depend on the initial wealth distribution among cohorts. Upon existence, the dynamics of the capital growth rate has a saddle-point trajectory that converges to a unique steady state. Along the transition path, the growth rate exhibits exponentially decreasing oscillations.

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Paper provided by HAL in its series Post-Print with number hal-00630459.

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Date of creation: May 2009
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Publication status: Published, International Economic Review, 2009, 50, 2, 459-484
Handle: RePEc:hal:journl:hal-00630459
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00630459/en/
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