Active intermediation in a monetary overlapping generations economy

Date
1998
Authors
Pingle, Mark
Tesfatsion, Leigh
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Altmetrics
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Research Projects
Organizational Units
Economics
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Abstract

This paper establishes that the profit-seeking activities of private intermediaries can ensure Pareto efficiency in the standard pure-exchange monetary overlapping generations economy without the need for government monetary or fiscal policy intervention. Moreover, these profit-seeking activities are shown to rule out all aperiodic and k-periodic cycles for k greater than 2. Contrary to much recent work on intermediation, the profit opportunities that arise for intermediaries in this context are not due to assumed frictions or asymmetric information. Rather, they are due to the dynamic open-ended structure of the economy, which permits debt roll-over.

Description
<p>This is a working paper of an article from <em>Journal of Economic Dynamics and Control </em>22 (1998): 1543, doi:<a href="http://dx.doi.org/10.1016/S0165-1889(97)00105-X" id="x-ddDoi">10.1016/S0165-1889(97)00105-X</a></p>
Keywords
Financial intermediation, Overlapping generations, Pareto efficiency
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