We develop a general equilibrium stochastic OLG model with heterogenous households. Households differ with respect to their productivity. Productivity depends stochastically on parents' unobservable investment in their child's human capital and an aggregate productivity shock. We introduce a...

We develop a general equilibrium stochastic OLG model with heterogenous households. Households differ with respect to their productivity. Productivity depends stochastically on parents' unobservable investment in their child's human capital and an aggregate productivity shock. We introduce a...

In finitely additive exchange economies the usual definition of competitive equilibrium can result in an empty equilibrium set, and therefore one has to consider notions of ε-competitive equilibria. In this paper we investigate the relationship between two notions of ε-competitive equilibria