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Macroeconomic Theory$
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Jean-Pascal Benassy

Print publication date: 2011

Print ISBN-13: 9780195387711

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780195387711.001.0001

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Intertemporal Equilibria with Optimizing Agents

Intertemporal Equilibria with Optimizing Agents

(p.65) 4 Intertemporal Equilibria with Optimizing Agents
Macroeconomic Theory

Jean-Pascal Bénassy

Oxford University Press

This chapter analyzes different deterministic models with boundless horizons where all decisions are taken by maximizing agents. It first presents a benchmark model, Ramsay model, with exogenous incomes. This model, with a single infinitely lived consumer, has a single dynamic equilibrium and good efficiency properties. The chapter then introduces the overlapping generations (OLG) model, where households are pictured as a sequence of overlapping families, each with its own utility function and budget constraint. Also, it describes a different version of the OLG model, wherein money serves as a store of value between one period and the next. Finally, the chapter sets forth a synthetic model of the Ramsey-OLG model, which combines the long-lived households of the Ramsey model and the OLG structure.

Keywords:   maximizing agents, Ramsay model, overlapping generations model, Ramsey-OLG model, households, money

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