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Competitive Equilibrium in an Overlapping Generations Model with Production Loans

Author

Listed:
  • Dihai Wang

    (School of Economics, Fudan University, Shanghai 200433, China)

  • Gaowang Wang

    (Center for Economic Research, Shandong University, Jinan 250100, China)

  • Heng-fu Zou

    (China Economics and Management Academy, Central University of Finance and Economics, Beijing 100083, China)

Abstract

The paper shows that there do exist two kinds of steady states equilibria in the overlapping generations models with consumption and production loans, similar to the pure exchange economies examined by Gale (1973). Furthermore, the local stability properties of these two (kinds of) steady states are also investigated: In the classical case, the golden-rule steady state is stable and the balanced steady state is saddle-point stable; however, in the Samuelson case, the golden-rule steady state is saddle-point stable and the balanced steady state is stable.

Suggested Citation

  • Dihai Wang & Gaowang Wang & Heng-fu Zou, 2017. "Competitive Equilibrium in an Overlapping Generations Model with Production Loans," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 12(2), pages 268-279, June.
    • Handle: RePEc:fec:journl:v:12:y:2017:i:2:p:268-279
    as

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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-006-017-0012-3
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    References listed on IDEAS

    as
    1. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
    2. Hiraguchi, Ryoji, 2012. "Multiple equilibrium in the overlapping generations model revisited," Economics Letters, Elsevier, vol. 115(1), pages 70-72.
    3. Bliss, Christopher, 2008. "Multiple equilibrium in the Diamond Capital Model," Economics Letters, Elsevier, vol. 100(1), pages 143-145, July.
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    More about this item

    Keywords

    multiple equilibria; overlapping generations model; production loans;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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