Overlapping Generations Model with Incomplete Markets: The Numeraire Case II

Abstract

This paper deals with the existence of equilibrium in a non-classical Overlapping Generations Model with incomplete markets and one-period numeraire assets. The stochastic structure of the model is given by an infinite event-tree in which each node has a finite number of immediate successors. The peculiarity of this Overlapping Generations Model consists of the eventual presence of infinitely lived agents. To rule out Ponzi schemes, we impose debt constraints, due to Levine-Zame [1996], to the infinitely lived agents.