Dynamics in an olg model with non-separable preferences

Giorgia Marini

No 15, Public Finance Research Papers from Istituto di Economia e Finanza, DSGE, Sapienza University of Rome

Abstract: This paper presents sufficient conditions for existence and uniqueness of a steady state equilibrium in an OLG model with non-separable preferences and analyzes the implications of such assumption for the local stability of the steady state equilibrium. The conditions for a stable solution are derived under the assumption that habits are transmitted both across and within generations. Under this assumption, monotonic convergence to the steady state is not always assured. Both competitive and optimal equilibrium may display explosive dynamics.

Keywords: Non-separable preferences; OLG; cycles (search for similar items in EconPapers)
JEL-codes: D50 D91 E13 E32 O41 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-10
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Persistent link: https://EconPapers.repec.org/RePEc:gfe:pfrp00:00015

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