Fiscal Policy in an Overlapping Generations Model with Bequest‐as‐Consumption

Philippe Michel and Pierre Pestieau

Journal of Public Economic Theory, 2004, vol. 6, issue 3, 397-407

Abstract: This paper analyzes an overlapping generation (OLG) growth model wherein saving finances second period consumption and bequest‐as‐consumption. First, it looks at the market equilibrium and at the optimal solution; then it turns to the issue of decentralizing the optimal solution with various taxes and transfers. Depending on the available instruments, either a first‐best or a second‐best optimum can be achieved. Throughout the paper, the results are contrasted with those obtained in the standard OLG model without intergenerational transfers.

Date: 2004
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https://doi.org/10.1111/j.1467-9779.2004.00171.x

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Working Paper: Fiscal policy in an overlapping generations model with bequest-as-consumption (2004)
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