Overlapping generations model

Heterodox The overlapping generations (OLG) model is one of the dominating frameworks of analysis in the study of macroeconomic dynamics and economic growth.

[6][7] Books devoted to the use of the OLG model include Azariadis' Intertemporal Macroeconomics[8] and de la Croix and Michel's Theory of Economic Growth.

[4]  In contrast, to Ramsey–Cass–Koopmans neoclassical growth model in which individuals are infinitely-lived and the economy is characterized by a unique steady-state equilibrium, as was established by Oded Galor and Harl Ryder,[11] the OLG economy may be characterized by multiple steady-state equilibria, and initial conditions may therefore affect the long-run evolution of the long-run level of income per capita.

[5] The two-sector model provides a framework of analysis for the study of the sectoral adjustments to aggregate shocks and implications of international trade for the dynamics of comparative advantage.

Oded Galor and his co-authors develop OLG models where population growth is endogenously determined to explore: (a) the importance the narrowing of the gender wage gap for the fertility decline,[6] (b) the contribution of the rise in the return to human capital and the decline in fertility to the transition from stagnation to growth,[7][15] and (c) the importance of population adjustment to technological progress for the emergence of the Malthusian trap.