Published 2003 by Research Division, Federal Reserve Bank of Kansas City in Kansas City [Mo.] .
Written in EnglishRead online
|Statement||Joseph H. Haslag and Antoine Martin.|
|Series||RWP ;, 03-03, Research working paper (Federal Reserve Bank of Kansas City : Online) ;, 03-03.|
|Contributions||Martin, Antoine., Federal Reserve Bank of Kansas City. Research Division.|
|The Physical Object|
|LC Control Number||2004616007|
Download Optimality of the Friedman rule in overlapping generations model with spatial separation
Optimality of the Friedman rule in overlapping generations model with spatial separation Joseph H. Haslag and Antoine Martin ∗ June Abstract Recent papers suggest that when intermediation is analyzed seri-ously, the Friedman rule does not maximize social welfare in overlap-ping generations model in which money is valued because of spatial.
We show that intergenerational transfers play a key role in this result, the Friedman rule is a necessary condition for an efficient allocation in equilibrium, and the Friedman rule is chosen whenever agents can implement mutually beneficial arrangements.
Joseph H. Haslag & Antoine Martin, "Optimality of the Friedman rule in overlapping generations model with spatial separation," Research Working Paper RWPFederal Reserve Bank of Kansas City, revised Joseph H.
Haslag & Antoine Martin. Joseph H. Haslag & Antoine Martin, "Optimality of the Friedman rule in an overlapping generations model with spatial separation," Staff ReportsFederal Reserve Bank of New : RePEc:fip:fednsr Note: For a published version of this report, see Joseph H.
Haslag and Antoine Martin, "Optimality of the Friedman Rule in an Overlapping Generations Model with Spatial Separation. Optimality of the Friedman Rule in an Overlapping Generations Model with Spatial Separation Joseph H. Haslag and Antoine Martin Federal Reserve Bank of New York Staff Reports, no.
October JEL classification: E52, E58, H21 Abstract We examine models with spatial separation and limited communication that have shown. In a recent contribution, da Costa and Werning () break with this tradition and consider the optimality of the Friedman rule in a model with heterogeneous agents and allow the government to levy nonlinear income taxes.
Interestingly, they show that the Friedman rule is optimal in their setting (for any social welfare function that redistributes from the rich to the poor).Cited by: 4. and consider the optimality of the Friedman rule in a model with heterogeneous agents and allow the government to levy nonlinear income taxes.
Interestingly, they show that the Friedman rule is optimal in their setting (for any social welfare function that redistributes from the rich to the poor).
As with Chari et al.™s (, ) earlier. In related work, Woodford () considers the optimality of the Friedman rule in this model. He characterizes the policy that maximizes steady-state utility rather than the one that maximizes the discounted value of by: A model of perpetual youth is presented as complementary to the two-period life model.
A continuum of generations constitutes the population. Agents face a constant probability of dying and are allowed to make negative life insurance. Using both models, as well as the model of Ramsey, ﬁscal policy File Size: KB. This abstract economy is ﬁisomorphicﬂto the baseline overlapping generations model.
The Pareto suboptimality in this economy will be the source of potential ine¢ ciencies in overlapping generations model.
Daron Acemoglu (MIT) Economic Growth Lecture 8 Novem 6 / ity of the Friedman rule. For the shopping-time model the Friedman rule is optimal with essentially no restrictions on preferences or trans-action technologies. For the cash-credit model the Friedman rule is optimal if preferences are separable between the consumption goods and leisure, or if leisure shifts consumption towards the credit good.
Chapter 4 The overlapping generations (OG) model 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 con-cession to reality will have a big impact on implications. Recall that the RA model had a few special characteristics: Size: KB. Optimal Fiscal Policy in Overlapping Generations Models Carlos Garriga Federal Reserve Bank of St. Louis May 22nd, (First version: December ) Abstract In this paper, we explore the proposition that the optimal capital income tax is zero using an overlapping generations model.
We prove that for a large class of preferences, the optimal. is the spatial curvature in any time-slice of the universe; it is equal to one-sixth of the spatial Ricci curvature scalar R since = (¨ + ˙ +) in the Friedmann model. We see that in the Friedmann equations, a(t) depends only on ρ, p, Λ, and intrinsic curvature k.
It does not depend on which coordinate system we chose for spatial slices. Overlapping Generations and Macro-economics xiii Overlapping Generations in Other Fields xv Outline of the Book xvi Acknowledgments xvii 1 Competitive Equilibria 1 The Model 1 Two-period-lived Individuals 2 Neo-classical Technology 3 Firms 4 Main Assumptions 4 The Assumptions on the Utility Function 4.
Economics A Lecture Outline #4 (version ) Maurice Obstfeld Government Debt and Taxes As a result of the events of Septembergovernment actions to un-derwrite the U.S.
–nancial system, coupled with a massive recession and a huge –scal stimulus plan, are. The Friedman rule, a widely studied prescription for monetary policy, is optimal in Townsend's turnpike model of money; it is not so in the overlapping generations version of his stochastic. The Friedman rule in an overlapping-generations model and consider the optimality of the Friedman rule in a model with heterogeneous agents Consider a two-period overlapping generations (hereafter OLG) model wherein individ-uals work in the ﬁrst period and consume in both.
There is no bequest by: 4. Chapter 4 Models of Overlapping Generations The representative household model is based on the assumption that all households are identical.
An alternative class of models allows for households to differ. As young households are being born and old households die, there is a succession of overlapping generations.
At any given time, householdsFile Size: 1MB. Overlapping Generations Models of General Equilibrium John Geanakoplos July 3, Abstract The OLG model of Allais and Samuelson retains the methodological as-sumptions of agent optimization and market clearing from the Arrow-Debreu model, yet its equilibrium set has diﬀerent properties: Pareto ineﬃciency, inde.
The overlapping generations (OLG) model is one of the dominating frameworks of analysis in the study of macroeconomic dynamics and economic growth. In contrast, to the Ramsey–Cass–Koopmans neoclassical growth model in which individuals are infinitely-lived, in the OLG model individuals live a finite length of time, long enough to overlap with at least one period of another agent's life.
General Equilibrium, Overlapping Generations Models, and Optimal Growth Theory by Truman F. Bewley,available at Book Depository with free delivery worldwide.4/5(1). [eng] Cash-in-advance constraints in the overlapping generations model: neutrality of monetary policies and macro-dynamics.
This article is concerned with the role of money in an O.L.G. model. Proposition 1 In the overlapping generations model with production loans, there exist two kinds of steady states: one is the golden-rule steady state with ﬁthe biological rate of interestﬂ, and the other is the balanced steady states without any role of public capital (or debt).5 De–nition 2 A model will be called classical (Samuelson) if.
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.
lifetimes but there are consumers of diﬁerent generations living at any point in time - the overlapping-generations model. These two cases share many features but also have important diﬁerences. Most of the course material is built on inﬂnitely-lived agents, but we also study the overlapping-generations model in some depth.
The overlapping generations model, invented by Allais and Samuelson but here augmented with land, represents such a situation. Financial equilibrium can again be reduced to general equilibrium. At first glance it would seem that the model requires a solution of an infinite number of supply equals demand equations, one for each time period.
policy analysis. The book is based for the most part on the Diamond (one-sector, two-factor, two-period lives) overlapping generations model, and it concentrates on the policy areas for which this model is the most appropriate: the analysis of the optimality of equilibrium under perfect markets, public debt and public spending, optimal second best.
and restore the optimality of Friedman rule.2 The abstract to his paper reads3 It is demonstrated that the existingresult in the literature regardinga positive relationshipbetween money creationand the steady-statecapitalintensityand welfare [in overlapping generations models] is.
developing a dynamic model of imperfect competition at the same level of generality as the Arrow-Debreu-McKenzie model. In addition the model de-veloped is tractable and amenable to the program of studying the working of markets. The overlapping generations model. We study perfect foresight competitive equilibrium in an overlapping generations model with productive capital and a fixed nominal stock of money.
We obtain almost-complete characterizations of (a) the existence of a monetary equilibrium from an arbitrary initial capital stock, and (b) the existence of anefficient monetary equilibrium from an arbitrary initial capital by: 6. A Life-Cycle Overlapping-Generations Model of the Small Open Economy Ben J.
Heijdra∗ University of Groningen Ward E. Romp] University of Groningen February Abstract In this paper we construct an overlapping generations model for the small open economy incorporating a realistic description of the mortality process.
With age-dependent mortal. T1 - Optimality of the Friedman rule in economies with distorting taxes. AU - Chari, V. AU - Christiano, Lawrence J. AU - Kehoe, Patrick J. PY - /4. Y1 - /4. N2 - We find conditions for the Friedman rule to be optimal in three standard monetary models. Our main contribution is to shed light on two issues in the by: Title: Optimality and Monetary Equilibria in Stationary Overlapping Generations Models With Long Lived Agents: Growth Versus Discounting Author.
Truman Bewley also treats optimal growth and overlapping generations models as special cases of the general equilibrium model. He uses the model and the first and second welfare theorems to explain the main ideas of insurance, capital theory, growth theory, and social : $ Lecture Notes 3: The Overlapping Generations Model Zhiwei Xu ([email protected]) The Ramsey-Cass-Koopmans model considers a representative household that lives in–nite hori-zons.
In many circumstances, however, the assumption of a representative household is not Size: KB. Diamond model. Assumptions Old people hold capital and money Young endowed with labor –rms produce according to Yt = F (Kt,Nt) where now Nt is the size of gen t.
rt is the real rate of interest on loans to –rms wt the real wage rate Econ (Lecture 13) Overlapping Generations Ma 13 / 16File Size: 98KB. inter-temporal allocation of resources is the Overlapping Generations Model (OLG hereafter).
In the OLG model new cohorts are born in every period, live for a number of periods and die. Therefore, at any point in time, society is composed of individuals belonging to the different generations that are currently alive. As it turns out, the kind of. Inﬁnitely-Lived Agent and Overlapping Generations Models: A Review Andr´es Erosa and Martin Gervais The literature concerned with dynamic ﬁscal policy has evolved in two main directions over the last 20 years or so.
On the one hand, there is a large literature on optimal taxation. In the context of a standard neoclassical growth model with. Introduction to the Overlapping Generation Model - Chapter 2.
Financial and General Equilibrium in Social Security - Chapter 3. Present Value Analysis of. The literature on dynamic Heckscher-Ohlin models in an overlapping generations environment is less abundant. Galor () characterizes the dynamics of a two-sector, two-period-lived overlapping generations model of growth in a closed economy.
Papers using two-country versions of Galor () assume some difference across countries besides factor.Sakai, Y., (), "Conditional Pareto Optimality of Stationary Equilibrium in a Stochastic Overlapping Generations Model", Discussion Paper No.Center for Economic Research, Department of Economics, University of by: Money The Overlapping Generations Model Planning problem Total supply of the good in the economy at date t: Total demand for the good at t is: Economy-wide resource constraint: c 1 + c 2 1+n = w 1 In a steady state, planner™s problem: maxU(c 1,c 2) = logc 1 +logc 2 subject to resource constraint.
Joydeep Bhattacharya ISU Money and the File Size: KB.