Abstract
We study fixed price temporary equilibria (with rationing) and sequences of temporary equilibria in a three commodities (goods, labor, bonds) overlapping generations model with endogenous investment. Young consumers, living two periods, work, consume, and buy bonds for financing next period's consumption. New firms, existing for two periods, make a production plan for the next period, taking into account expected rationing, assumed similar to present rationing. The plan determines the amount of goods to buy as capital, financed by bonds. Old firms produce, using labor and the previously bought capital. Different regimes exist and expectations can be self-fulfilling and self-destroying.
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Weddepohl, C., Yildirim, M. Fixed price equilibria in an overlapping generations model with investment. Zeitschr. f. Nationalökonomie 57, 37–68 (1993). https://doi.org/10.1007/BF01237436
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DOI: https://doi.org/10.1007/BF01237436