Frequency of trade and the determinacy of equilibrium in economies of overlapping generations
Hippolyte d'Albis and
Emmanuelle Augeraud-Véron ()
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Emmanuelle Augeraud-Véron: MIA - Université de la Rochelle
Authors registered in the RePEc Author Service: Emmanuelle Augeraud-Véron
Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne
Abstract:
In a recent article, Demichelis and Polemarchakis (2007) highlighted the role played by the frequency of trade on the degree of indeterminacy of equilibrium in economies of overlapping generations. Assuming that time has a finite starting point and extends into the infinite future, they prove that the degree of indeterminacy increases with the number of periods in the life-span of individuals, which is assumed to be certain. We show that this result does not hold when individual longevity is uncertain. We build a discrete time model that uniformly converges to a standard continuous time overlapping-generation model when the frequency of trade is infinite. Deriving the equilibrium prices, we demonstrate that the degree of indeterminacy is independent of the frequency of trade and is always equal to one
Keywords: Overlapping generations; perpetual youth model; determinacy; continuous time; discrete time (search for similar items in EconPapers)
JEL-codes: D50 D90 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2012-06
New Economics Papers: this item is included in nep-dge
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http://mse.univ-paris1.fr/pub/mse/CES2012/12042.pdf (application/pdf)
Related works:
Journal Article: Frequency of trade and the determinacy of equilibrium in economies of overlapping generations (2013)
Working Paper: Frequency of trade and the determinacy of equilibrium in economies of overlapping generations (2013)
Working Paper: Frequency of trade and the determinacy of equilibrium in economies of overlapping generations (2013)
Working Paper: Frequency of trade and the determinacy of equilibrium in economies of overlapping generations (2013)
Working Paper: Frequency of trade and the deterrminacy of equilibrium in economies of overlapping generations (2012)
Working Paper: Frequency of trade and the deterrminacy of equilibrium in economies of overlapping generations (2012)
Working Paper: Frequency of trade and the determinacy of equilibrium in economies of overlapping generations (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12042
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