Parental altruism, life expectancy and dynamically inefficient equilibria

Hippolyte d'Albis () and Bruno Decreuse

Journal of Economic Dynamics and Control, 2009, vol. 33, issue 11, pages 1897-1911

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.

Keywords: Overlapping-generations; models; Productive; capital; Dynamic; (in)efficiency; Intergenerational; altruism (search for similar items in EconPapers)
Date: 2009

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Related works:
Working Paper: Parental altruism, life expectancy and dynamically inefficient equilibria (2007)
Working Paper: Parental altruism, life expectancy and dynamically inefficient equilibria (2007)
Working Paper: PARENTAL ALTRUISM, LIFE EXPECTANCY, AND DYNAMICALLY INEFFICIENT EQUILIBRIA (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:dyncon:v:33:y:2009:i:11:p:1897-1911

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