Auerbach-Kotlikoff OLG model in a Huggett heterogeneous agents incomplete markets economy

Josheski, Dushko and Boskov, Tatjana and Miteva, Natasha (2023) Auerbach-Kotlikoff OLG model in a Huggett heterogeneous agents incomplete markets economy. Yearbook - Faculty of Tourism and Business Logistics, 3 (1). pp. 1-24. ISSN 2671-3969

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Abstract

This paper will investigate A-K OLG model in Huggett heterogeneous agents in incomplete markets setting. Dynamic inefficiency i.e., shows that for this model when government debt is decreasing welfare also decreases. Government transfer payments decrease, and payroll tax revenue is increasing, interest rate has is decreasing dramatically, wages rise and capital and labor also rise. On contrary in A-K model in Hugget economy which is not dynamically inefficient, assets-capital; consumption are age-dependent. Furthermore, RET hypothesis at is shown does not hold since agents cannot replicate risk free payoffs in incomplete markets (proof due to Divino,Orrilo,(2017), in our case Ricardian equivalence fails to hold, we observe that the difference in consumption and government debt does not converge to zero over time, as indicated by the plotted lines.

Item Type:	Article
Subjects:	Social Sciences > Economics and business
Divisions:	Faculty of Tourism and Business Logistics
Depositing User:	Dusko Josevski
Date Deposited:	16 Jan 2024 10:14
Last Modified:	16 Jan 2024 10:14
URI:	https://eprints.ugd.edu.mk/id/eprint/33151

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