Stationary Markovian equilibrium in overlapping generation models with stochastic nonclassical production and Markov shocks

This paper provides new sufficient conditions for the existence and computation of Markovian equilibrium for a large class of OLG models with Markov shocks to production. The economies considered allow for a very large class of “reduced-form” production functions, including those that are nonclassical, encompassing stochastic OLG models with social security, income redistribution policies, taxation, valued fiat money, production nonconvexities, and monopolistic competition. Our approach combines aspects of both topological and order theoretic fixed point theory and provides globally stable successive approximations algorithms for computing extremal Markovian equilibrium objects.