AN ANALYTICAL INVESTIGATION ON A NON-MONETARY TWO-SECTOR OVERLAPPING GENERATIONS ECONOMY

Mohamed Mehdi JELASSI (Bilkent University)
Serdar SAYAN (Bilkent University)

The analysis of the effects of differences in population growth rates between nations on commodity and factor flows requires a model that allow for population age profiles and hence, labor supply and saving behavior to evolve accordingly with the differing speeds of population growth over time. In this study, a 2x2x2 overlapping-generations model is developed for this purpose. We show that analytical perfect-foresight solutions for this non-monetary overlapping generations autarky economy are feasible to obtain, facilitating a better understanding of how the economy moves from its initial endowments to the long-run equilibrium.