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Frequency of trade and the determinacy of equilibrium in economies of overlapping generations

Author

Listed:
  • Hippolyte d'Albis

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuelle Augeraud-Véron

    (MIA - Mathématiques, Image et Applications - EA 3165 - ULR - La Rochelle Université)

Abstract
Demichelis and Polemarchalis highlighted the role played by the frequency of trade in the degree of indeterminacy of equilibrium in economies of overlapping generations. Assuming that time has a finite starting point and extends into the infinite future, they prove that the degree of indeterminacy increases with the number of periods in the life-span of individuals, which is assumed to be deterministic. We show that this result does not hold when individual longevity is represented by an exponential survival function: the degree of indeterminacy depends on individual preferences and monetary policy but is independent of the frequency of trade.

Suggested Citation

  • Hippolyte d'Albis & Emmanuelle Augeraud-Véron, 2013. "Frequency of trade and the determinacy of equilibrium in economies of overlapping generations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00759208, HAL.
    • Handle: RePEc:hal:cesptp:hal-00759208
    DOI: 10.1111/j.1742-7363.2013.12005.x
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    References listed on IDEAS

    as
    1. Hippolyte d'Albis & Emmanuelle Augeraud-véron, 2009. "Competitive Growth In A Life-Cycle Model: Existence And Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 459-484, May.
    2. Augeraud-Véron, Emmanuelle & D'Albis, Hippolyte, 2009. "Continuous-Time Overlapping Generations Models," TSE Working Papers 09-047, Toulouse School of Economics (TSE).
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    15. Hippolyte d’Albis & Emmanuelle Augeraud-Véron, 2007. "Balanced cycles in an OLG model with a continuum of finitely-lived individuals," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 181-186, January.
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    Cited by:

    1. d’Albis, Hippolyte & Augeraud-Véron, Emmanuelle & Hupkes, Hermen Jan, 2015. "Local determinacy of prices in an overlapping generations model with continuous trading," Journal of Mathematical Economics, Elsevier, vol. 58(C), pages 16-24.

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    More about this item

    Keywords

    overlapping generations; perpetual youth model; determinacy; continuous time; discrete time;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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