• Table of Contents
    • Abstract
    • Keywords
    • Article
      • 1 Indeterminacy and suboptimality in a simple OLG model
      • 2 Endogenous cycles
      • 3 Money and the sequential economy
      • 4 Understanding OLG economies as lack of market clearing at infinity
      • 5 Land, the real rate of interest, and Pareto efficiency
        • 5.1 Pareto efficiency and bubbles
        • 5.2 Social security
      • 6 Demography in OLG
      • 7 Impatience and uniform impatience
      • 8 Comparative statics for OLG economies
      • 9 Keynesian macroeconomics
      • 10 Neoclassical equilibrium vs. classical equilibrium
      • 11 Sunspots
    • See Also
    • Bibliography
    • How to cite this article

overlapping generations model of general equilibrium

John Geanakoplos
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
Alternate versions available: 1987 Edition
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Abstract

The OLG model of Allais and Samuelson retains the methodological assumptions of agent optimization and market clearing from the Arrow–Debreu model, yet its equilibrium set has different properties: Pareto inefficiency, multiplicity, positive valuation of money, and a golden rule equilibrium in which the rate of interest is equal to population growth (independent of impatience). These properties are shown to derive not from market incompleteness, but from lack of market clearing ‘at infinity’: they can be eliminated with land or uniform impatience. The OLG model is used to analyse bubbles, social security, demographic effects on stock returns, the foundations of monetary theory, Keynesian vs. real business cycle macromodels, and classical vs. neoclassical disputes.
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How to cite this article

Geanakoplos, John. "overlapping generations model of general equilibrium." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 24 October 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_O000067> doi:10.1057/9780230226203.1236

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