Second-best national saving and growth with intergenerational disagreement

Francisco Gonzalez (), Itziar Lazkano and Sjak Smulders ()
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Itziar Lazkano: Department of Economics, University of Wisconsin-Milwaukee

No 1403, Working Papers from University of Waterloo, Department of Economics

Abstract: We illustrate the contrast between two sources of intergenerational disagreement when generations are overlapping and governments aggregate preferences in a utilitarian manner. Social preferences tend to exhibit a present-bias because generations are imperfectly altruistic about future generations; but they tend to exhibit a future-bias because coexisting generations are imperfectly altruistic about currently older generations. When the future-bias dominates, society faces an intergenerational equity problem, in which case the present-day government tends to support institutions that enable commitments to lower growth at the expense of future generations. This is so even with perfect altruism about future generations.

JEL-codes: D60 H30 O40 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-03, Revised 2014-03
New Economics Papers: this item is included in nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:wat:wpaper:1403

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