Continuous-Time Overlapping Generations Models

Abstract

Age structured populations are studied in economics through overlapping generations models. These models allow for a realistic characterization of life-cycle behaviors and display intertemporal equilibrium that are not necessarily efficient. This article uses the latest developments in continuous time overlapping generations models to show the influence of the vintage structure of the population on the volatility of intertemporal prices. Permanent cycles can be found on the neighborhood of steady-states while the transitional dynamics are generically governed by short run fluctuations.JEL Classification: D5, D9, E2.

Frequency of trade and the determinacy of equilibrium in economies of overlapping generations

“…The difference between Demichelis and Polemarchakis' results and ours can be explained by the fact that the difference equation that characterizes the equilibrium price dynamics remains of order 1. We are aware (d'Albis and Augeraud‐Véron , , ) that using a Poisson process to describe the survival function greatly eases the computation of the model and think that generalizing our results to realistic mortality patterns is a promising avenue of research (Azomahou, Boucekkine, and Diene ). This simplicity nevertheless allows us to compute the closed form solutions of the dynamics and to extend Demichelis and Polemarchakis () to monetary equilibrium and constant relative risk aversion (CRRA) preferences.…”