PARETO OPTIMALITY OF THE GOLDEN RULE EQUILIBRIUM IN AN OVERLAPPING GENERATIONS MODEL WITH PRODUCTION AND TRANSFERS

Jean-François Mertens and Anna Rubinchik ()

Macroeconomic Dynamics, 2015, vol. 19, issue 8, 1780-1799

Abstract: The main result is that the golden rule equilibrium (GRE) is Pareto optimal (in the classical sense) in an overlapping generations (OG) model with constant-returns-to-scale production, transfers, arbitrary life-time productivity and homogeneous instantaneous felicity. In addition, we extend Cass and Yaari's equivalence between efficiency (aggregate consumption dominance) and present value dominance (with evaluation made using a candidate equilibrium price path).

Date: 2015
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Working Paper: Pareto optimality of the golden rule equilibrium in an overlapping generations model with production and transfers (2012)
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