Existence, uniqueness, and stability of equilibrium in an OLG economy

Wendner, Ronald

doi:10.1007/s00199-003-0360-9

Cited by 10 publications

(6 citation statements)

References 4 publications

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“…In fact, the literature has definitely shown, by resorting to various mathematical tools, that the Diamond's model with rational individuals (perfect foresight) can never possess an unstable equilibrium, and thus business cycle is prevented in that case (Galor and Ryder, 1989;Longo and Valori, 2001;Wendner, 2003;Chen et al, 2008).…”

mentioning

confidence: 99%

Public health spending, old-age productivity and economic growth: Chaotic cycles under perfect foresight

Fanti

Gori

2011

Journal of Economic Behavior & Organization

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This paper analyses the dynamics of a double Cobb-Douglas economy with overlapping generations and public health investments that affect the supply of efficient labour of the old-aged. It is shown that the positive steady state of the economy is unique. Moreover, we provide necessary and sufficient conditions for the emergence of endogenous deterministic complex cycles when individuals are perfect foresighted. Interestingly, the equilibrium dynamics shows rather complicated phenomena such as a multiplicity of period-bubbling.

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mentioning

confidence: 99%

Public health spending, old-age productivity and economic growth: Chaotic cycles under perfect foresight

Fanti

Gori

2011

Journal of Economic Behavior & Organization

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“…Pada penerapannya, Model OLG akan lebih efektif ketika diterapkan pada penelitian negara maju dikarenakan memiliki stabilitas ekonomi yang lebih kuat. Model OLG diterapkan salah satunya tujuannya untuk memperoleh hasil analisis yang membandingkan suatu generasi atau periode tertentu, sehingga didapatkan kerangka kebijakan yang mengarah pada steady state (Geanakoplos and Polemarchakis, 1992;Marini, 2007;Tyrowicz and Makarski, 2015). Pada penelitian ini OLG akan menganalisis siklus hidup manusia pada era bonus demografi yang berkaitan dengan fenomena ketimpangan yang semakin berkembang.…”

Section: Tinjauan Pustaka Tinjauan Teoritis Overlapping Generations (Olg) Modelunclassified

“…Hipotesis siklus hidup menjelaskan tentang maksimisasi pengalokasian konsumsi pada usia berapapun tergantung sumber daya kehidupan (nilai sekarang dari pendapatan tenaga kerja ditambah warisan yang diterima jika ada (Modigliani, 1986). Dampak dari upah riil berhubungan positif ketika upah riil naik yang mempengaruhi kenaikan konsumsi dan tabungan, sedangkan dampak dari konsumsi eksternal negatif yaitu ketika konsumsi naik maka tabungan menurun (Marini, 2007;Bruce and Turnovsky, 2013;De Nardi and Fella, 2017). Oleh karena itu perilaku konsumsi dari tiap generasi memberikan pengaruh terhadap kondisi perekonomian terutama masalah ketimpangan.…”

Section: Teori Konsumsiunclassified

Welfare Inequality and Demographic Dividend in East Java: The Overlapping Generations (Olg) Model Approach

Dana

Musaiyaroh

2018

EJAVEC

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The issue of demography into an important discussion caused can affect economic growth and inequality in East Java Inequality in east Java showed an increase.Unequal distribution of income is a source of high inequality in East Java. This study aims to show the effectiveness of demographic changes can affect inequality in East Java with the approach of Overlapping Generations (OLG) model. The data used in this research is time series data in the first quarter of 2010- the fourth quarter 2015. Analyzer used in this research is Generalized Method of Moments (GMM). The results of this study show that demographic changes in East Java have the potential to increase inequality. The number of productive age populations with non-productive causes of high inequality. Consumption rate and the number of the productive workforces also become one of the sources of inequality. Therefore, the Settlement of inequality coupled with demographic changes in East Java needs the role of government through targeted social protection programs and infrastructure improvements. In addition, the need for land-based policies, opportunity-based policies, human resource capacity building policies, job matching.

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“…de la Croix and Michel (2002) studied the dynamics of OLG economies under different assumptions about expectations and obtained a condition of uniqueness of equilibrium by making use of the first and second derivatives of the production and utility functions. Wendner (2004) derived sufficient conditions for the existence of a unique and globally stable steady-state equilibrium for OLG economies with production imposing separate requirements on the utility and production functions and which do not require assumptions concerning third-order derivatives of the production and utility functions. Wang (1993) showed the conditions for the existence of equilibrium in an OLG model with production and uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Existence of equilibrium in an overlapping‐generations model with government debt

Lin

2021

J Public Economic Theory

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The Diamond overlapping generations (OLG) model with government debt has been widely utilized in economics, but the existence of the steady-state equilibrium is either assumed or illustrated numerically. This paper provides easily checkable conditions for the existence and uniqueness of steady-state equilibrium in this model. By checking the first derivatives of the production and utility functions and their interactions, we can determine whether the model has a nontrivial equilibrium or not. We show that the level of government debt, production technology, individual preference, and the growth rate are important for the existence of equilibrium. If government debt exceeds a certain level, equilibrium will not exist. Given technology, preference, and the growth rate, the upperbounds of the government debt-output ratio in equilibrium can be determined based on our results.

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Existence, uniqueness, and stability of equilibrium in an OLG economy

Cited by 10 publications

References 4 publications

Public health spending, old-age productivity and economic growth: Chaotic cycles under perfect foresight

Public health spending, old-age productivity and economic growth: Chaotic cycles under perfect foresight

Welfare Inequality and Demographic Dividend in East Java: The Overlapping Generations (Olg) Model Approach

Existence of equilibrium in an overlapping‐generations model with government debt

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