Simple OLG Model Explained With Numerical Example in MATLAB

In this paper it is been made an attempt to map the global OLG models and afterwards to draw phase diagrams for the baseline OLG models, namely by simulating the Diamond (1965) capital accumulation simple OLG model. First it is discussed the issue of optimality in OLG models, then the general framework of the models is being mapped, with the issue of overaccumulation in OLG models. In the next section this paper presents dynamic general equilibrium analysis of an overlapping generations models in which each individual lives in two periods lifecycle. This represents the simplest of OLG models. An overlapping generations model is an applied DGE model for which the lifecycle models are applied. In the applied part benchmark models has been compared to, model with parameters that generate poverty traps and multiple equilibria