Dynamic efficiency and inefficiency in a class of overlapping-generations economies with multiple assets

Martin Hellwig

No 2024_08, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: For overlapping-generations models with multiple assets and without labour, welfare assessments of equilibrium allocations depend on whether the certainty equivalents of the one-period-ahead marginal rates of return on assets that are held are larger or smaller than the population growth rate. Conditional on the period and the history up to that period, the equilibrium values of these certainty equivalents are the same for all assets held and equal to the riskless rate if a riskless asset is held. If population growth is uncertain, the standard of comparison is the certainty equivalent of the population growth rate when interpreted as the marginal rate of return on an additional asset.

Keywords: Dynamic Inefficiency; overlapping-generations models; First Welfare Theorem; certainty-equivalents criterion (search for similar items in EconPapers)
JEL-codes: D15 D61 E21 E22 E62 H30 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-dge
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