Intergenerational Transfers, Lifetime Welfare and Resource Preservation

Simone Valente

No 06/55, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: This paper analyzes overlapping-generations models where natural capital is owned by selfish agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations: if the resource share in production is sufficiently high, the welfare gain induced by preser- vation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely selfish reasons.

Keywords: Distortionary Taxation; Intergenerational Transfers; Overlapping Generations; Renewable Resources; Sustainability; Technological Change (search for similar items in EconPapers)
JEL-codes: H30 Q01 Q20 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-10
New Economics Papers: this item is included in nep-env and nep-pbe
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Related works:
Journal Article: Intergenerational transfers, lifetime welfare, and resource preservation* (2008)
Working Paper: Intergenerational Transfers, Lifetime Welfare and Resource Preservation (2006)
Working Paper: Intergenerational Transfers, Lifetime Welfare and Resource Preservation (2005)
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