Dynamically Inefficient Equilibria in the Auberbach-Kotlikoff Model

The issue addressed in this paper is how robust dynamically efficient steady state equilibria in a 55 period overlapping generations economy are to changes in the parametrization of the model. Numerical simulations are used to detect parameter constellations which lead to non Pareto optimal market solutions with the capital stock in excess of the so called Golden Rule level. The results suggest that rather unplausible values of the pure rate of time preference, the intertemporal elasticity of substitution or the annal population growth rate are required to obtain dynamic inefficiency