Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt Pingle, Mark Tesfatsion, Leigh Tesfatsion, Leigh
dc.contributor.department Economics 2018-02-18T02:31:01.000 2020-06-30T02:07:08Z 2020-06-30T02:07:08Z Thu Jan 01 00:00:00 UTC 1998 1998
dc.description.abstract <p>It is well known that the first welfare theorem can fail for overlapping generations economies with private production and unsecured debt. This paper demonstrates that the reason for this failure is that intermediation is modeled as a purely passive coordination activity implemented by a Walrasian Auctioneer. When intermediation is modeled instead as a contestable activity carried out by a corporate intermediary owned by consumer-shareholders and operated in their interest, every equilibrium is Pareto efficient. In broader terms, these findings caution that the inefficiency observed in standard modelings of overlapping generations economies may not be the reflection of an intrinsic market failure. Rather, the observed inefficiency could instead be due to a fundamental incompleteness in the model specification — the presumed inability of private agents to exploit the earnings opportunities associated with incurring and forever rolling over debt.</p>
dc.description.comments <p>This is an article from <em>Macroeconomic Dynamics </em>2 (1998): 183. Posted with permission.</p>
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dc.identifier archive/
dc.identifier.articleid 1438
dc.identifier.contextkey 9476147
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/439
dc.language.iso en
dc.source.bitstream archive/|||Sat Jan 15 00:16:47 UTC 2022
dc.subject.disciplines Finance and Financial Management
dc.subject.disciplines Growth and Development
dc.subject.disciplines Other Economics
dc.subject.keywords Intermediation
dc.subject.keywords overlapping generations
dc.subject.keywords pareto efficiency
dc.subject.keywords production
dc.subject.keywords unsecured debt
dc.subject.keywords bubbles
dc.title Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt
dc.type article
dc.type.genre article
dspace.entity.type Publication
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relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d
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