  This paper provides a detailed analysis of the local determinacy of monetary
and non-monetary steady states in Tirole (1985)'s classical two-period
overlapping generations model with capital and production. We show that the
sufficient condition for local determinacy in endowment economies provided by
Scheinkman (1980) does not generalize to models with production: there are
robust examples with arbitrary utility functions in which the non-monetary
steady state is locally determinate or indeterminate. In contrast, the monetary
steady state is locally determinate under fairly weak conditions.
