Overview

dynamic inefficiency


Show Summary Details

Quick Reference

Arises when the equilibrium of an intertemporal economy is not Pareto efficient. The allocation of consumption needs to be efficient across commodities at each point in time and between consumption and saving. In a dynamically inefficient economy there is excessive saving which leads to excessive capital accumulation. Dynamic efficiency is characterized by the golden rule. See also overlapping generations economy.

Subjects: Economics.


Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.