Two-sided Intergenerational Transfer Policy and Economic Development: A Politico-economic Approach

Katsuyuki Naito

MPRA Paper from University Library of Munich, Germany

Abstract: We consider an overlapping generations model with public education and social security where the overall size of these policies is determined in a repeated voting game. We investigate the interaction between the politically determined policies and economic development in a Markov perfect equilibrium. The following results are obtained. First, the level of human capital determines whether these policies are sustained in the Markov perfect equilibrium. Second, if the level of initial human capital is sufficiently high, human capital grows forever. In contrast, if the level of initial human capital is low, the economy might be caught in a poverty trap.

Keywords: Public education; Social security; Markov perfect equilibrium; Economic development (search for similar items in EconPapers)
JEL-codes: H55 O16 (search for similar items in EconPapers)
Date: 2010-02-27
New Economics Papers: this item is included in nep-dge and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Two-sided intergenerational transfer policy and economic development: A politico-economic approach (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21020

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