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Dynamic efficiency and inefficiency in a class of overlapping-generations economies with multiple assets

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  • Martin F. Hellwig

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

For overlapping-generations models with multiple assets and without labour, welfare assessments of equilibrium allocations depend on whether the certainty equivalents of the one-period-ahead marginal rates of return on assets that are held are larger or smaller than the population growth rate. Conditional on the period and the history up to that period, the equilibrium values of these certainty equivalents are the same for all assets held and equal to the riskless rate if a riskless asset is held. If population growth is uncertain, the standard of comparison is the certainty equivalent of the population growth rate when interpreted as the marginal rate of return on an additional asset.

Suggested Citation

  • Martin F. Hellwig, 2024. "Dynamic efficiency and inefficiency in a class of overlapping-generations economies with multiple assets," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2024_08, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2024_08
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    References listed on IDEAS

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    More about this item

    Keywords

    Dynamic Inefficiency; overlapping-generations models; First Welfare Theorem; certainty-equivalents criterion;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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