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

Cozzi, G.

Authors

G. Cozzi



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.

Citation

Cozzi, G. (2001). A note on heterogeneity, inefficiency, and indeterminacy with Ricardian preferences. Journal of Economic Theory, 97(1), 191-202. https://doi.org/10.1006/jeth.2000.2681

Journal Article Type Article
Publication Date Mar 1, 2001
Deposit Date Mar 2, 2010
Journal Journal of Economic Theory
Print ISSN 0022-0531
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 97
Issue 1
Pages 191-202
DOI https://doi.org/10.1006/jeth.2000.2681
Public URL https://durham-repository.worktribe.com/output/1522067

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