On equilibrium determinacy in overlapping generations models with money

Tomohiro Hirano and Alexis Akira Toda

Economics Letters, 2024, vol. 239, issue C

Abstract: This paper provides a detailed analysis of the local determinacy of monetary and non-monetary steady states in Tirole (1985)’s classical two-period overlapping generations model with capital and production. We show that the sufficient condition for local determinacy in endowment economies provided by Scheinkman (1980) does not generalize to models with production: there are robust examples with arbitrary utility functions in which the non-monetary steady state is locally determinate or indeterminate. In contrast, the monetary steady state is locally determinate under fairly weak conditions.

Keywords: Local determinacy; Money; Overlapping generations model; Production (search for similar items in EconPapers)
JEL-codes: C62 D53 G12 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Working Paper: On Equilibrium Determinacy in Overlapping Generations Models with Money (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:239:y:2024:i:c:s0165176524002428

DOI: 10.1016/j.econlet.2024.111758

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