## Introduction to Dynamic Macroeconomic Theory: An Overlapping Generations ApproachEconomies are constantly in flux, and economists have long sought reliable means of analysing their dynamic properties. This book aims to provide a succinct and accessible exposition of modern dynamic (or intertemporal) macroeconomics. |

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Page 21

So, for one consumption allocation to be Pareto superior to another allocation, it

must make at least one person better off and ... u* = c1}(t)cht(t + 1); so utility is

equal to the product of the consumption when young and

So, for one consumption allocation to be Pareto superior to another allocation, it

must make at least one person better off and ... u* = c1}(t)cht(t + 1); so utility is

equal to the product of the consumption when young and

**consumption when old**.Page 122

When individual h of generation t is old, the budget constraint is

lending (the amount of private lending times the gross interest rate) plus the

gains ...

When individual h of generation t is old, the budget constraint is

**Consumption****when old**is equal to the endowment when old plus the returns from the privatelending (the amount of private lending times the gross interest rate) plus the

gains ...

Page 148

We would be more accurate if we referred to

we have in Equation (6.2), wrote it as c>l-'(t + 1) = + 1) + r(t)ih(t) + a\t)d(t + 1) + ...

We would be more accurate if we referred to

**consumption when old**as expected**consumption when old**and, instead of writing the budget constraint when old aswe have in Equation (6.2), wrote it as c>l-'(t + 1) = + 1) + r(t)ih(t) + a\t)d(t + 1) + ...

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### Contents

Describing the Environment | 5 |

Competitive Equilibrium | 32 |

Introducing a Government | 55 |

Copyright | |

10 other sections not shown

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### Common terms and phrases

45-degree line A-period bonds aggregate savings function amount arbitrage assets autarky Bailey curve bequests bliss point borrowing and lending budget line capital stock Chapter chooses competitive equilibrium Consider an economy consumption allocation consumption point consumption when old consumption when young credit controls crop endowment point equal Equation equilib equilibrium condition equilibrium price example economy exchange rate EXERCISE expected price fiat money Figure given gives government bonds government revenues gross interest rate growth rate hold indifference curve individual h inflation labor lifetime budget constraint market clearing maximize member h money creation money supply output Pareto optimal Pareto superior perfect foresight period person h pm(t present value price of land price path price sequence private borrowing production function Proposition purchase quantity rate of return reserve requirement restrictions result Ricardian equivalence seignorage solve stationary equilibrium stationary monetary equilibrium storage sumption tax-transfer scheme taxes and transfers temporary equilibrium tion utility function