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Tackling indeterminacy in overlapping generations models

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Abstract

Overlapping generations models may have a continuum of equilibria. Previous studies have been largely confined to the local analysis that linearizes the model around the steady state. However, what is true of the linearized system only applies for an unknown-sized open neighborhood of the steady state. In this paper I develop a method to diagnose the indeterminacy in overlapping generations models by computing the set of all equilibria. I also provide a procedure to simulate the economy with indeterminate equilibrium.

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Authors and Affiliations

  1. Department of Economics, Purdue University, Krannert Center 216, 403 West State Street, West Lafayette, IN, 47907, USA

    Zhigang Feng

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  1. Zhigang Feng
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Correspondence to Zhigang Feng.

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Feng, Z. Tackling indeterminacy in overlapping generations models. Math Meth Oper Res 77, 445–457 (2013). https://doi.org/10.1007/s00186-012-0407-4

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  • DOI: https://doi.org/10.1007/s00186-012-0407-4

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