An overlapping generations model, abbreviated to OLG model, is a type of economic model in which agents live a finite length of time long enough to overlap with at least one period of another agent's life.
All OLG models share several key elements:
- Individuals receive an endowment of goods at birth.
- Goods cannot endure for more than one period.
- Money endures for multiple periods.
- Individual's lifetime utility is a function of consumption in all periods.
The concept of an OLG model was inspired by Irving Fisher's monograph The Theory of Interest. Notable improvements were published by Maurice Allais in 1947, Paul Samuelson in 1958, and Peter Diamond in 1965.
Read more about Overlapping Generations Model: Basic OLG Model, Attributes of The OLG Model, OLG Models With Production
Famous quotes containing the words overlapping, generations and/or model:
“The absolute things, the last things, the overlapping things, are the truly philosophic concerns; all superior minds feel seriously about them, and the mind with the shortest views is simply the mind of the more shallow man.”
—William James (1842–1910)
“The generations of thy peers are fled.
And we ourselves shall go;
But thou possessest an immortal lot,
And we imagine thee exempt from age”
—Matthew Arnold (1822–1888)
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—Lauren Hutton (b. 1944)