Abstract
We study a class of stochastic Overlapping generations (OLG) economies that have one-memory equilibria, that is equilibria that are determined by the current and past realizations of the states of uncertainty. This class is negligible, but important. In particular, it contains all the known examples of nonexistence of recursive equilibrium. We show that, within this restricted domain, the existence of recursive equilibrium is actually typical, and such examples are therefore nonrobust.
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We thank Felix Kubler, Herakles Polemarchakis and Steve Spear for many useful discussions. This paper was started while the first author was visiting Columbia Business School.
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Citanna, A., Siconolfi, P. On the nonexistence of recursive equilibrium in stochastic OLG economies. Econ Theory 37, 417–437 (2008). https://doi.org/10.1007/s00199-007-0298-4
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DOI: https://doi.org/10.1007/s00199-007-0298-4