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

Ngoc-Sang Pham

MPRA Paper from University Library of Munich, Germany

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.

Keywords: infinite-horizon; general equilibrium; overlapping generations; asset price bubble; equilibrium indeterminacy. (search for similar items in EconPapers)
JEL-codes: C6 D5 E4 (search for similar items in EconPapers)
Date: 2024-11-11
New Economics Papers: this item is included in nep-dge
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