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Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt

Author

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  • Pingle, Mark
  • Tesfatsion, Leigh

Abstract

It is well known that the first welfare theorem fails for the pure exchange^overlapping generations economy studied by Samuelson (1958) and for the private production overlapping generations economy studied by Diamond (1965). Tirole (1985) combines and extends the Samuelson and Diamond frameworks by permitting both unsecured debt and private pro duction and shows that the first welfare theorem stillfails to hold. This paper shows that the reason for this failure is that intermediation is niodelled as a purely passive coordination ac tivity implemented by a Walrasian Auctioneer.

Suggested Citation

  • Pingle, Mark & Tesfatsion, Leigh, 1997. "Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt," ISU General Staff Papers 199704010800001040, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199704010800001040
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    Cited by:

    1. Tesfatsion, Leigh, 2006. "Agent-Based Computational Modeling and Macroeconomics," ISU General Staff Papers 200601010800001585, Iowa State University, Department of Economics.
    2. Magill, Michael & Quinzii, Martine, 2003. "Nonshiftable capital, affine price expectations and convergence to the Golden Rule," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 239-272, June.
    3. Michael Magill & Martine Quinzii, "undated". "The Stock Market in the Overlapping Generations," Department of Economics 99-13, California Davis - Department of Economics.
    4. repec:isu:genstf:1997010108000012996 is not listed on IDEAS

    More about this item

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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