The paper analyzes the consequences of joining markets of government discount bonds between identical economies when, in each country, there exists a positive probability of the government to default. In autarky such economies of overlapping generations of consumers with capital accumulation...

type="main" xml:lang="en" <p>This paper shows how intergenerational trading of non-depletable natural resources may affect investment in physical capital, implying distinct patterns of overtaking between countries. Specifically, the results indicate that the elasticity of the marginal utility of...</p>

The standard overlapping generations model is extended to include retradeable paper assets (shares) of firms. Two period lived consumers hold portfolios including paper assets and capital in order to transfer wealth over time. An infinitely lived firm produces a stochastic output using a...