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Existence of a Pareto-optimal equilibrium in nearly-stationary overlapping-generations economies. (English) Zbl 0821.90014

Summary: In overlapping-generations models of fiat money, the existence of a Pareto-optimal equilibrium – which defines an optimal quantity of money – is more general than well-known counter-examples suggest. Those examples, having no optimal equilibrium just because there are small variations in households’ tastes and endowments across generations, are not typical. On the contrary: For an open-dense, full-measure subset of smooth stationary economies and an open-dense subset of continuous stationary economies, introducing small variations in tastes and endowments across generations preserves the existence of an optimal equilibrium. Put simply, optimal equilibria generically exist for nearly- stationary economies.

MSC:

91B50 General equilibrium theory
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