Modeling Overlapping Generations in a Complementarity Format

Modeling Overlapping Generations
in a Complementarity Format

Tobias N. Rasmussen
Center for Economic and Business Research,
Danish Ministry of Trade and Industry
Department of Economics, University of Aarhus
`tnr@cebr.dk`

Thomas F. Rutherford
Center for Economic and Business Research,
Danish Ministry of Trade and Industry
Department of Economics, University of Colorado
`rutherford@colorado.edu`

March, 2001
(this version April 8, 2001)

Abstract

This paper provides an introduction to numerical simulation of overlapping generations models with perfect foresight and finite lifetimes. The paper illustrates the advantages of the complementarity framework for this class of problems. Three GAMS programs illustrate how these models can be formulated for applied research. Issues addressed in the paper include calibration to base year data, representation of bequests, government tax and expenditure policies, and labor/leisure choice with endogenous retirement.

PDF Files and GAMS Code

The paper is in PDF format.
Appendix C: OLG exchange model in GAMS/MCP format (and GAMS/MPSGE format).
Appendix D: OLG exchange model with multiple households and bequest in GAMS/MCP format (and GAMS/MPSGE format).
Appendix E: OLG production model in GAMS/MCP format (and GAMS/MPSGE format).
A zip archive with the six GAMS code appendices can be downloaded here.
Renger van Nieuwkoop has reconciled our results with Aurbach and Kotlikoff.