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Equilibrium price dynamics in an overlapping-generations exchange economy

  • Brito, Paulo
  • Dilao, Rui

We present a continuous time overlapping generations model for an endowment Arrow-Debreu economy with an age-structured population. For an economy with a balanced growth path, we prove that Arrow-Debreu equilibrium prices exist, and their dynamic properties are age-dependent. Our model allows for an explicit dependence of prices on critical age-specific endowment parameters. We show that, if endowments are distributed earlier than some critical age, then speculative bubbles for prices do exist.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 699.

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Date of creation: 31 Oct 2006
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Handle: RePEc:pra:mprapa:699
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