Co-existence of a representative agent type equilibrium with a non-representative agent type equilibrium

S. Aiyagari

Journal of Economic Theory, 1992, vol. 57, issue 1, 230-236

Abstract: We provide an example of an overlapping generations model with bequest motives and a non-negativity constraint on bequests which has at least two equilibria. In one equilibrium the bequest motive is operative at all dates, and the equilibrium is formally equivalent to that of a representative infinitely lived agent model. In the other equilibrium the bequest motive is never operative, and the equilibrium is formally equivalent to that of an overlapping generations model without a bequest motive. The example has obvious implications for the Ricardian equivalence doctrine and the neutrality of (lump-sum) tax-transfers across generations.

Date: 1992
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:57:y:1992:i:1:p:230-236

DOI: 10.1016/S0022-0531(05)80050-X

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