Dynamic efficiency and intergenerational altruism

Emmanuel Thibault

Review of Economic Dynamics, 2008, vol. 11, issue 3, 679-687

Abstract: Can dynamic inefficiency that may occur in societies populated by non altruistic agents be removed by introducing intergenerational altruism ? Although the answer (see Abel, 1987, AER or Weil, 1987, JME) seems to be negative, this paper shows, by means of a simple example, that the presence of an arbitrarily low proportion of altruists can be sufficient to prevent a society from reaching a non Pareto optimal equilibrium. Intergenerational transfers from the old to the young can therefore provide an alternative ---to public debt, fiat money or money bubbles which transfer goods from the young to the old--- solution to the dynamic efficiency problem. (Copyright: Elsevier)

Keywords: OLG model; Dynamic efficiency; Intergenerational altruism (search for similar items in EconPapers)
JEL-codes: C62 D91 O41 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.red.2007.12.001

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