The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications

Ngoc-Sang Pham

Working Papers from HAL

Abstract: We prove that a two-cycle equilibrium in a general equilibrium model with infinitely-lived agents constitutes an equilibrium in an overlapping generations (OLG) model. Conversely, an equilibrium in an OLG model that satisfies additional conditions is part of an equilibrium in a general equilibrium model with infinitely-lived agents. Note that our models consisting of three assets (physical capital, Lucas' tree, and fiat money) cover both exchange and production economies. Applying this result, we demonstrate that equilibrium indeterminacy and rational asset price bubbles may arise not only in OLG models but also in models with infinitely-lived agents.

Keywords: infinite-horizon; general equilibrium; overlapping generations; asset price bubble; equilibrium indeterminacy (search for similar items in EconPapers)
Date: 2024-11-11
Note: View the original document on HAL open archive server: https://hal.science/hal-04776166v4
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Working Paper: The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications (2026)
Working Paper: The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications (2024)
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