Determinacy of equilibrium in stationary economies with both finite and infinite lived consumers

We consider the determinacy of perfect foresight equilibrium near steady-state equilibria of stationary infinite-horizon economies. The work of T. J. Kehoe and D. K. Levine ( Econometrica 53 (1985) , 433–453) is generalized by the inclusion of both infinite lived agents and overlapping generations o...

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Bibliographic Details
Published inJournal of economic theory Vol. 46; no. 2; pp. 255 - 290
Main Authors Muller, Walter J, Woodford, Michael
Format Journal Article
LanguageEnglish
Published New York Elsevier Inc 01.12.1988
Elsevier
Academic Press
SeriesJournal of Economic Theory
Subjects
Equilibrium
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Summary:We consider the determinacy of perfect foresight equilibrium near steady-state equilibria of stationary infinite-horizon economies. The work of T. J. Kehoe and D. K. Levine ( Econometrica 53 (1985) , 433–453) is generalized by the inclusion of both infinite lived agents and overlapping generations of finite lived agents, and the inclusion of production and non-depreciating pure rents. We show that indeterminacy is possible in robust examples, and that the dimension of the indeterminacy can be as large as the number of goods per period. We also discuss extreme cases in which determinacy is guaranteed.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0022-0531
1095-7235
DOI:10.1016/0022-0531(88)90131-7