A two-sector overlapping-generations model: a global characterization of the dynamical system

Article Abstract:

A two-sector overlapping-generations model is proposed, characterized by a global dynamic system that implies a globally unique equilibrium solution involving perfect foresight. Analysis suggests that gross consumption substitutability is insufficient for establishing such a solution, but assuming a capital-intensive investment good and a normal good second period consumption of two-period individual is. Multidimensional commodity space models requiring global dynamic analysis can benefit from this framework.

Consumption (Economics), Substitution (Economics)

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Comment on McLennan and Sonnenschein "Sequential bargaining as a noncooperative foundation for Walrasian equilibrium."

Article Abstract:

The study by McLennan and Sonnenschein (1991) involving Walrasian equilibrium failed to take into account situations where traders observe each other's characteristics. Specifically, their Proposition 2 and Theorem 3 were not able to consider strategies that produce situation where each agent ends up utilizing two units of the good. Contrary to the two authors' claim in Proposition 2, no non-Walrasian example was found.

Economics, Research and Development in the Social Sciences and Humanities, Models, Negotiation, Negotiations, Walrasian model

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