We construct a sequence of pure exchange, stationary OLG economies in which generations have longer and longer life spans and all agents maximize a discounted sum of utilities with a fixed, positive, and common discount rate. Period utility functions and endowment patterns are subject to mild restrictions and within generation heterogeneity is permitted. We show that: (i) _Every_ sequence of equilibrium interest rates converges to the discount rate. (ii) Eventually _every_ nonmonetary steady state is optimal and a monetary steady state will never exist. (iii) For any agent consumption at any fixed age converges to permanent income evaluated using the utility discount rate.
Published in: _Journal of Economic Theory_ (Vol. 45, No. 1, June 1988, pp. 102-127), https://doi.org/10.1016/0022-0531(88)90256-6.