We present a simple comparative statics analysis of steady-state equilibria in overlapping generations economies with capital accumulation. We regard comparative statics as paradoxical whenever an exogenous increase in saving propensity induces a decrease (an increase) in consumption at the steady state when interest rate is positive (negative). It is shown that there is an exact relation between paradoxical comparative statics and a perverse intersection of properly identified curves of demand for and supply of capital in value. The demand curve for capital in value coincides with that of neo-Ricardian analysis. We relate our conclusions to some old and recent issues in capital theory.

An obtrusive remark on capital and comparative statics / Bloise, G; Reichlin, Pietro. - In: METROECONOMICA. - ISSN 0026-1386. - 60:1:(2009), pp. 54-76.

An obtrusive remark on capital and comparative statics

REICHLIN, PIETRO
2009

Abstract

We present a simple comparative statics analysis of steady-state equilibria in overlapping generations economies with capital accumulation. We regard comparative statics as paradoxical whenever an exogenous increase in saving propensity induces a decrease (an increase) in consumption at the steady state when interest rate is positive (negative). It is shown that there is an exact relation between paradoxical comparative statics and a perverse intersection of properly identified curves of demand for and supply of capital in value. The demand curve for capital in value coincides with that of neo-Ricardian analysis. We relate our conclusions to some old and recent issues in capital theory.
An obtrusive remark on capital and comparative statics / Bloise, G; Reichlin, Pietro. - In: METROECONOMICA. - ISSN 0026-1386. - 60:1:(2009), pp. 54-76.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/3970
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