Computation of Equilibria in OLG Models with Many Heterogeneous Households

Sebastian Rausch

Chapter 2 in Macroeconomic Consequences of Demographic Change, 2009, pp 11-42 from Springer

Abstract: Abstract Over the past twenty years infinite horizon general equilibrium models with overlapping enerations (OLG) have become an important tool for policy analysis, and have been fruitfully applied in fields such as macroeconomics or public finance (see, e.g., Auerbach and Kotlikoff (1987), and Kotlikoff (2000) for an overview). OLG models naturally involve a large number of variables and equations that describe the equilibrium behavior of economic agents. As a consequence, the development of large-scale OLG models is often limited by the computational capacity of available numerical solution methods. In particular, models that exhibit a rich household side including a variety of household-specific effects, a large number of heterogeneous households, and realistic agent lifetimes typically require “customized solution methods” which may be both costly to implement and difficult to validate.

Keywords: Income Effect; Representative Agent; Indifference Curve; Balance Growth Path; Production Possibility Frontier (search for similar items in EconPapers)
Date: 2009
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Related works:
Journal Article: Computation of Equilibria in OLG Models with Many Heterogeneous Households (2010)
Working Paper: Computation of Equilibria in OLGModels with Many Heterogeneous Households (2008)
Working Paper: Computation of Equilibria in OLG Models with Many Heterogeneous Households (2007)
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DOI: 10.1007/978-3-642-00146-8_2

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