A Note on Heterogeneity, Inefficiency, and Indeterminacy with Ricardian Preferences
Journal
Journal of Economic Theory
ISSN
0022-0531
ISSN-Digital
1095-7235
Type
journal article
Date Issued
2001-03-01
Author(s)
Abstract
The main issue raised in this note is the nonequivalence between the infinite-horizon model where agents are infinitely lived and the successive generations model with altruistic finitely lived agents: in the presence of a nonnegative bequest requirement, endowment heterogeneity imposes a revision of the acritical adoption of the infinitely lived agent representation in modern macro-economics. By analysing nonstationary monetary equilibria in a reinterpretation of Townsend's "turnpike" model, this paper shows how the traditional issues of market inefficiency and indeterminacy of overlapping generations models carry over into modern macroeconomics through the natural finiteness of human lives despite "well behaved" Ricardian altruism.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
97
Number
1
Start page
191
End page
202
Pages
12
Subject(s)
Eprints ID
222085