Equilibrium Indeterminacy with Parental Altruism

Pietro Reichlin

No 12787, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Equilibria where altruistic generations are linked via positive bequests are indeterminate and subject to sunspot variables when each individual's utility in non-separable in her own age contingent consumption and sufficiently biased towards old age. This result does not require strong income effects and it applies if individuals select their own savings and bequests by taking the decisions of their offsprings and successors as given. In this case, the equivalence with the Dynastic Equilibria of a Ramsey-type model envisaged in Barro (1974) fails. I show that the structure of equilibria of the olg model with altruism is more similar to the one generated in a canonical olg economy with two goods.

Keywords: Bequets; Parental altruism; Indeterminacy (search for similar items in EconPapers)
JEL-codes: E10 E21 E32 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-age and nep-dge
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Journal Article: Equilibrium indeterminacy with parental altruism (2019)
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