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

  • D'ALBIS Hippolyte

    (LERNA, TSE)

  • AUGERAUD-VERON Emmannuelle

In this paper, the dynamic behaviour of the capital growth rate is analyzed using an overlapping-generations model with continuous trading and finitely lived agents. Assuming a technology satisfying constant returns to capital, the equilibrium growth rate is piecewise-defined by functional differential equations with both delayed and advanced terms. The existence of a solution expressed as a series of exponentials crucially depends 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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File URL: http://www2.toulouse.inra.fr/lerna/travaux/cahiers2007/07.19.240.pdf
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Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 07.19.240.

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Date of creation: Oct 2007
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Handle: RePEc:ler:wpaper:07.19.240
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