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A note on heterogeneity, inefficiency, and indeterminacy with Ricardian preferences.

Cozzi, G. (2001) 'A note on heterogeneity, inefficiency, and indeterminacy with Ricardian preferences.', Journal of economic theory., 97 (1). pp. 191-202.

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.

Item Type:Article
Full text:Full text not available from this repository.
Publisher Web site:http://dx.doi.org/10.1006/jeth.2000.2681
Record Created:02 Mar 2010 17:05
Last Modified:03 Mar 2010 11:02

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