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
Keywords
- Overlapping generations
- Perpetual youth model
- Determinacy
- Continuous time
- Discrete time
Pages
- 85-100
URL of the HAL notice
Version
- 1
Volume
- 9