Existence of steady – state equium in an overlapping-generations model with production

Summary This paper establishes an existence theorem of a non-trivial (positive capital stock) steady-state equilibrium in Diamond's (1965) overlapping-generations model with production by employing the steady-state consumption curve introduced in Ihori (1978). The assumptions on preferences and production technologies that ensure the existence of a nontrivial steadystate equilibrium are separated from each other, unlike in Galor and Ryder (1989). We also provide two simple examples which illustrate the importance of two conditions in the theorem.Detailed comments by Tomoichi Shinotsuka and the referees of the journal were quite helpful. We also thank Marcus Berliant, Mark Bus, John H. Boyd III, Ban Chuan Cheah, Rajat Deb, Jim Dolmas, Oded Galor, Greg Huffman, Toshihiro Ihori, Radhika Lahiri, Lionel McKenzie, Arundhati Sen, and the seminar participants at the Midwest Mathematical Economics Conference in Ann Abor and at University of Rochester. The second author gratefully acknowledges the financial supports from the European Community Human Capital Mobility Program.