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

Ngoc-Sang Pham

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Abstract: We prove that a two-cycle equilibrium in a general equilibrium model with infinitely-lived agents also 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. Applying this result, we demonstrate that equilibrium indeterminacy and rational asset price bubbles may arise in both types of models.

Date: 2024-11, Revised 2025-02
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Related works:
Working Paper: The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications (2024)
Working Paper: The relationship between general equilibrium models with infinite-lived agents and overlapping generations models, and some applications (2024)
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