Abstract
In a Diamond type overlapping generations model stability properties of steady state perfect foresight equilibria are analyzed under changes in the growth rate of the population. In contrast with the model of Diamond it is assumed that production is carried out according to decreasing returns to scale. Consequently profits are no longer zero and are uniformly distributed among young consumers. The stability analysis is carried out by analyzing an example with Cobb-Douglas utility and production functions. It is shown that under assumptions on the production coefficient of capital goods the set of perfect foresight steady state equilibria changes if the growth rate of the population changes. Also it is shown that the stability properties of the equilibria change under changes in the growth rate. This implies that there exists a saddle node bifurcation point.
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