Stationary Equilibria in an Overlapping Generations Economy with Stochastic Production

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Original languageEnglish
Pages (from-to)423-435
Journal / PublicationJournal of Economic Theory
Volume61
Issue number2
Publication statusPublished - Dec 1993
Externally publishedYes

Abstract

This paper generalizes the analyses of the existence, uniqueness, and stability of a non-trivial steady-state equilibrium in Galor and Ryder (J. Econ. Theory49 (1989), 360-375) to an overlapping generations economy with stochastic production. The study establishes sufficient conditions for the existence of a non-trivial stationary equilibrium as well as for the existence of a globally unique and stable non-trivial stationary equilibrium. It is shown that the existence of a non-trivial stationary equilibrium is not assured by conventional regularity conditions on the production function and preferences. Furthermore, multiplicity and indeterminacy of long-run equilibria appear to be commonplace. Journal of Economic Literature Classification Numbers: C62, E13, O41. © 1993 Academic Press. All rights reserved.