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Dynamic Efficiency in the Two-Sector Overlapping Generations Model

Author

Listed:
  • Cremers, Emily

Abstract

This paper examines dynamic efficiency in the context of a two-sector overlappinggenerations model. First, conditions for dynamic efficiency in a centrally planned economy arederived. Then, in a competitive environment, the implications of dynamic (in)efficiency for thesteady state relative price and steady state welfare are demonstrated. For the special case of alog-linear world, the golden rule savings rate is identified along with restrictions on parametersthat yield dynamically efficient steady states. The results are further demonstrated via awelfare analysis of a simple tax/subsidy scheme.

Suggested Citation

  • Cremers, Emily, 2006. "Dynamic Efficiency in the Two-Sector Overlapping Generations Model," Staff General Research Papers Archive 34856, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:34856
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    Citations

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    Cited by:

    1. Igor Fedotenkov, 2014. "Optimal asymmetric taxation in a two-sector model with population ageing," Bank of Lithuania Working Paper Series 15, Bank of Lithuania.
    2. Wei-Bin Zhang, 2015. "A Portfolio Equilibrium Model of Gold and Capital in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(12), pages 616-627, December.
    3. Drugeon, Jean-Pierre & Nourry, Carine & Venditti, Alain, 2010. "On efficiency and local uniqueness in two-sector OLG economies," Mathematical Social Sciences, Elsevier, vol. 59(1), pages 120-144, January.
    4. Zhang Wei-Bin, 2014. "Land Value and Rent Dynamics in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 235-258, December.
    5. Nourry, Carine & Venditti, Alain, 2011. "Local indeterminacy under dynamic efficiency in a two-sector overlapping generations economy," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 164-169, March.
    6. repec:beo:journl:v:63:y:2018:i:216:p:7-34 is not listed on IDEAS
    7. repec:beo:journl:v:62:y:2017:i:213:p:93-128 is not listed on IDEAS
    8. repec:beo:journl:v:62:y:2018:i:216:p:7-34 is not listed on IDEAS
    9. Wei-Bin ZHANG, 2015. "Tourism, Trade And Wealth Accumulation With Endogenous Income And Wealth Distribution Among Countries," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(1), pages 1-1, January.
    10. Zhang W.B., 2015. "Birth And Mortality Rates, Gender Division Of Labor, And Time Distribution In The Solow Growth Model," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 24(1), pages 121-134.
    11. Prof. Wei-Bin Zhang, 2015. "Economic Oscillations in a Multi-Country Growth Model with Free Trade and Tourism," Eurasian Business & Economics Journal, Eurasian Academy Of Sciences, vol. 2(2), pages 1-19, July.

    More about this item

    Keywords

    dynamic efficiency; overlapping generations model; Two-Sector;

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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