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Competitive growth in a life-cycle model : existence and dynamics

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: ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/V04016.pdf
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Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v04016.

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Length: 28 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:mse:wpsorb:v04016
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