COMPETITIVE EQUILIBRIA AND THE CORE OF OVERLAPPING GENERATIONS ECONOMIES

This paper analyzes whether the well known result that for Arrow-Debreu economies all competitive equilibria belong to the core holds true in overlapping generations economies. In these economies competitive equilibria are not a subset of the core. We define the classical set as the set of all those competitive allocations which cannot be affected by a monetary tax-transfer policy. Then, we demonstrate that every competitive equilibrium in the classical set belongs to the core of the economy. Further, we show that for large economies no monetary equilibrium belongs to the core. © 1990.