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2 - The overlapping generations model will not always have...

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The overlapping generations (OG) model 4.1 The model Now we will briefly discuss a macroeconomic model which has most of the important features of the RA model, but one - people die. This small concession to reality will have a big impact on implications. Recall that the RA model had a few special characteristics: 1. An unique equilibrium exists. 2. The economy follows a deterministic path. 3. The equilibrium is Pareto efficient.
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Unformatted text preview: The overlapping generations model will not always have these characteristics. So my presentation of this model will have two basic goals: to outline a model that appears frequency in the literature, and to use the model to illustrate some features that appear in other models and that some macroeconomists think are important to understanding business cycles. 1...
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