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

Journal article: 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.

Author(s)

Hippolyte d’Albis, Emmanuelle Augeraud-Véron

Journal
  • International Journal of Economic Theory
Date of publication
  • 2013
Keywords JEL
C61 C62 D51 D91 E13
Keywords
  • Overlapping generations
  • Perpetual youth model
  • Determinacy
  • Continuous time
  • Discrete time
Pages
  • 85-100
Version
  • 1
Volume
  • 9