Innovative investments, natural resources, and intergenerational fairness: are pension funds good for sustainable development?

Lucas Bretschger and Karen Pittel ()
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Karen Pittel: Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH), http://www.cer.ethz.ch/resec/people/people/pittelk

No 05/36, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We analyse long-term consumption paths in a dynamic two-sector economy with overlapping generations. Each young generation saves for the retirement age, both with private savings and pension funds. The productivity of each sector can be raised by sector-specific research while the essential use of a non-renewable natural resource poses a threat to consumption possibilities in the long run. Bonds, the two types innovations, and resource stocks are the different investment opportunities. We show that pension funds have a positive impact on long-term development, provided that individuals have a preference for own investments. In this case, sustainability is more likely to be achieved due to pension fund savings.

Keywords: Pension funds; sustainable development; financial investments; overlapping generations (search for similar items in EconPapers)
JEL-codes: O4 Q01 Q3 G23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-fin
Date: 2005-02
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Journal Article: Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development? (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:eth:wpswif:05-36

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