Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098968 | Journal of Economic Dynamics and Control | 2009 | 15 Pages |
Abstract
This paper presents a continuous time overlapping-generation (OLG) model which generalizes the Blanchard-Buiter-Weil model and clarifies the relationships between dynastic altruism, the length of planning horizons, and dynamic inefficiency. Our main innovation relies on the introduction of parental altruism, whose intensity is variable. We first show that parental altruism and life expectancy do favor overaccumulation. Second, we give a condition that explains why the Ramsey model may only display dynamic efficiency. These theoretical results are illustrated by a parameterization from US data. Our numerical exercises suggest that the US economy is dynamically efficient, mainly because of the shortness of life expectancy.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Hippolyte d'Albis, Bruno Decreuse,