THE UNIT ROOT PROPERTY AND OPTIMALITY: A SIMPLE PROOF

Subir Chattopadhyay
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Subir Chattopadhyay: Universidad de Alicante

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Consider a pure exchange OLG economy under stationary Markov uncertainty with one good and with sequentially complete markets. It is known that an interior stationary equilibrium allocation at which the agents common matrix of intertemporal rates of substitution has a Perron root which is less than or equal to one is conditionally Pareto optimal. We provide a simple and direct proof of this fact.

Keywords: Stochastic Overlapping Generations Models; Pareto Optimality. (search for similar items in EconPapers)
Pages: 13 pages
Date: 2000-12
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2000-31

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