A Note On The Characterization Of Inefficiency In Stochastic Overlapping Generations Economies
In this paper, we provide a characterization of interim ine±ciency in stochastic economies of overlapping generations under possibly sequentially incomplete markets. With respect to the established body of results in the literature, we remove the hypothesis of two-period horizons, by considering longer, though uniformly bounded, horizons for generations. The characteri- zation exploits a suitably Modi¯ed Cass Criterion, grounded on the long-rung behavior of compounded safe interest rates and independent of the length of horizons of generations. Thus, the hypothesis of two-period horizons is purely heuristic in establishing a criterion for ine±ciency. In addition, for sequentially incomplete markets, we adopt a suitable notion of unambiguous ine±ciency, separating the ine±cient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous ine±ciency reduces to ine±ciency when markets are sequentially complete.
|Date of creation:||Dec 2007|
|Contact details of provider:|| Postal: Via Silvio d'Amico 77, - 00145 Rome Italy|
Phone: +39 06 57114612
Fax: +39 06 57114771
Web page: http://host.uniroma3.it/dipartimenti/economia/it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Masahiro Okuno & Itzhak Zilcha, 1980. "On the Efficiency of a Competitive Equilibrium in Infinite Horizon Monetary Economies," Review of Economic Studies, Oxford University Press, vol. 47(4), pages 797-807.
- Piero Gottardi & Subir Chattopadhyay, 1999.
"- Stochastic Olg Models, Market Structure And Optimality,"
Working Papers. Serie AD
1999-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Chattopadhyay, Subir & Gottardi, Piero, 1999. "Stochastic OLG Models, Market Structure, and Optimality," Journal of Economic Theory, Elsevier, vol. 89(1), pages 21-67, November.
- Subir Chattopadhyay & Piero Gottardi, 1999. "Stochastic OLG Models, Market Structure, and Optimality," Working Papers 99-12, Brown University, Department of Economics.
- Benveniste, Lawrence M., 1976. "A complete characterization of efficiency for a general capital accumulation model," Journal of Economic Theory, Elsevier, vol. 12(2), pages 325-337, April.
- Balasko, Yves & Shell, Karl, 1980. "The overlapping-generations model, I: The case of pure exchange without money," Journal of Economic Theory, Elsevier, vol. 23(3), pages 281-306, December.
- Molina-Abraldes, Antonio & Pintos-Clapes, Juan, 2003. "A complete characterization of Pareto optimality for general OLG economies," Journal of Economic Theory, Elsevier, vol. 113(2), pages 235-252, December.
- Lawrence M. Benveniste, 1986. "Pricing Optimal Distributions to Overlapping Generations: A Corollary to Efficiency Pricing," Review of Economic Studies, Oxford University Press, vol. 53(2), pages 301-306.
- Subir Chattopadhyay, 2001. "Long-Lived Assets, Incomplete Markets, And Optimality," Working Papers. Serie AD 2001-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Espen Henriksen & Steve Spear, 2006. "Dynamic Suboptimality of Competitive Equilibrium in Multiperiod Overlapping Generations Economies," Computing in Economics and Finance 2006 223, Society for Computational Economics.
- Balasko, Yves & Cass, David & Shell, Karl, 1980. "Existence of competitive equilibrium in a general overlapping-generations model," Journal of Economic Theory, Elsevier, vol. 23(3), pages 307-322, December.
- Rao Aiyagari, S. & Peled, Dan, 1991. "Dominant root characterization of Pareto optimality and the existence of optimal equilibria in stochastic overlapping generations models," Journal of Economic Theory, Elsevier, vol. 54(1), pages 69-83, June.
- Burke, Jonathan L., 1987. "Inactive transfer policies and efficiency in general overlapping-generations economies," Journal of Mathematical Economics, Elsevier, vol. 16(3), pages 201-222, June.
When requesting a correction, please mention this item's handle: RePEc:rtr:wpaper:0083. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Telephone for information)
If references are entirely missing, you can add them using this form.