Premium
Frequency of trade and the determinacy of equilibrium in economies of overlapping generations
Author(s) -
d'Albis Hippolyte,
AugeraudVéron Emmanuelle
Publication year - 2013
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2013.12005.x
Subject(s) - determinacy , indeterminacy (philosophy) , economics , overlapping generations model , degree (music) , point (geometry) , function (biology) , mathematical economics , econometrics , mathematics , microeconomics , mathematical analysis , physics , geometry , quantum mechanics , evolutionary biology , acoustics , biology
Demichelis and Polemarchalis highlighted the role played by the frequency of trade in the degree of indeterminacy of equilibrium in economies of overlapping generations. Assuming that time has a finite starting point and extends into the infinite future, they prove that the degree of indeterminacy increases with the number of periods in the life‐span of individuals, which is assumed to be deterministic. We show that this result does not hold when individual longevity is represented by an exponential survival function: the degree of indeterminacy depends on individual preferences and monetary policy but is independent of the frequency of trade.