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The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications

Author

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  • Ngoc-Sang Pham

    (EM Normandie - École de Management de Normandie = EM Normandie Business School)

Abstract

We prove that a two-cycle equilibrium in a general equilibrium model with infinitely-lived agents constitutes an equilibrium in an overlapping generations (OLG) model. Conversely, an equilibrium in an OLG model that satisfies additional conditions is part of an equilibrium in a general equilibrium model with infinitely-lived agents. Note that our models consisting of three assets (physical capital, Lucas' tree, and fiat money) cover both exchange and production economies. Applying this result, we demonstrate that equilibrium indeterminacy and rational asset price bubbles may arise not only in OLG models but also in models with infinitely-lived agents.

Suggested Citation

  • Ngoc-Sang Pham, 2024. "The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications," Working Papers hal-04776166, HAL.
    • Handle: RePEc:hal:wpaper:hal-04776166
    Note: View the original document on HAL open archive server: https://hal.science/hal-04776166v4
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    Cited by:

    1. Stefano Bosi & Cuong Le Van & Ngoc-Sang Pham, 2025. "To Bubble or Not to Bubble: Asset Price Dynamics and Optimality in OLG Economies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-05199274, HAL.
    2. Pham, Ngoc Sang & Le Van, Cuong & Bosi, Stefano, 2025. "To Bubble or Not to Bubble: Asset Price Dynamics and Optimality in OLG Economies," MPRA Paper 125772, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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