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Frequency of trade and the determinacy of equilibrium in economies of overlapping generations

d'Albis, Hippolyte and Augeraud-Véron, Emmanuelle (2012): Frequency of trade and the determinacy of equilibrium in economies of overlapping generations. Published in: International Journal of Economic Theory , Vol. 1, No. 9 (March 2013): pp. 85-100.

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Abstract

Demichelis and Polemarchalis (2007) highlighted the role played by the frequency of trade on the degree of indeterminacy of equilibrium in economies of overlapping generations. Assuming that time has a finite starting point and extends into the infinite future, they prove that the degree of indeterminacy increases with the number of periods in the life-span of individuals, which is assumed to be deterministic. We show that this result does not hold when individual longevity is represented by an exponential survival function: the degree of indeterminacy depends on individual preferences and monetary policy but is independent of the frequency of trade.

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