REGULARITY AND STABILITY OF EQUILIBRIA IN AN OVERLAPPING GENERATIONS GROWTH MODEL

• Type: Article in International Scientific Journal
• Date: 2019

Authors

Mertens, JF (Author) Other; Rubinchik, A (Author) Other

Journal

Title: Macroeconomic Dynamics

Vol. 23

Pages: 699-729

ISSN: 1365-1005

Publisher: Cambridge University Press

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 3 Citations

Other information

Authenticus ID: P-017-3SF

DOI: 10.1017/s1365100516001334

Abstract (EN): In an exogenous-growth economy with overlapping generations, the Cobb-Douglas production, any positive life-cycle productivity, and time-separable constant elasticity of substitution (CES) utility, we analyze local stability of a balanced growth equilibrium (BGE) with respect to changes in consumption endowments, which could be interpreted as a transfer policy. We show that generically, in the space of parameters, equilibria around a BGE are locally unique and are locally differentiable functions of endowments, with derivatives given by kernels. Furthermore, those equilibria are stable in the sense that the effects of temporary changes decay exponentially toward ±¿.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 31