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The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice

Juan Cordoba and Marla Ripoll ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Dynastic models common in macroeconomics use a single parameter to control the willingness of individuals to substitute consumption both intertemporally, or across periods, and intergenerationally, or across parents and their children. This paper defines the concept of Elasticity of Intergenerational Substitution (EGS), and extends a standard dynastic model in order to disentangle the EGS from the EIS, or Elasticity of Intertemporal Substitution. A calibrated version of the model lends strong support to the notion that the EGS is significantly large than 1, and probably around 2.5. In contrast, estimates of the EIS suggests that it is lower than 1. What disciplines the identification is the need to match empirically plausible fertility rates for the U.S.

Keywords: Altruism; non-separable utility; intertemporal substitution; intergenerational substitution; value of a child (search for similar items in EconPapers)
JEL-codes: D10 D64 D91 J13 (search for similar items in EconPapers)
Date: 2014-08-01
New Economics Papers: this item is included in nep-dge and nep-upt
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Related works:
Working Paper: The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice (2018) Downloads
Working Paper: The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice (2017) Downloads
Working Paper: The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice (2014) Downloads
Working Paper: The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice (2014) Downloads
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