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

  • D'ALBIS Hippolyte

    (LERNA, TSE)

  • AUGERAUD-VERON Emmannuelle

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 LERNA, University of Toulouse in its series LERNA Working Papers with number 07.19.240.

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