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Capital Accumulation and Fiscal Policy in an OLG Model with Family Altruism

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  • STÉPHANE LAMBRECHT
  • PHILIPPE MICHEL
  • EMMANUEL THIBAULT

Abstract

The idea of family altruism is that parents care only about their children's income and not about the use of this income made by the children. First, we establish dynamical properties which place the OLG model with family altruism halfway between the model with pure life-cyclers ( Diamond 1965 ; American Economic Review 55, 1126-1150) and the one with dynastic altruism ( Barro 1974 ; Journal of Political Economy 82, 1095-1117). Then, we show that this concept leads to interesting fiscal policy conclusions less clear-cut and more realistic than those obtained with the two previous standard OLG models: a pay-as-you-go social security is neutral but not a public debt. Copyright 2006 Blackwell Publishing, Inc..

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Bibliographic Info

Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 8 (2006)
Issue (Month): 3 (08)
Pages: 465-486

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Handle: RePEc:bla:jpbect:v:8:y:2006:i:3:p:465-486

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  1. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  2. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
  3. Jones, Larry E. & Manuelli, Rodolfo E., 1992. "Finite lifetimes and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 171-197, December.
  4. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  5. Shone,Ronald, 2002. "Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521017039, April.
  6. N. Gregory Mankiw, 2000. "The Savers-Spenders Theory of Fiscal Policy," American Economic Review, American Economic Association, vol. 90(2), pages 120-125, May.
  7. MICHEL, Ph. & PESTIEAU, P., . "Fiscal policy in a growth model with both altruistic and nonaltruistic agents," CORE Discussion Papers RP -1301, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, April.
  9. Lambrecht, S. & Michel, P. & Thibault, E., 2000. "Intertemporal Equilibrium with Myopic Altruism," G.R.E.Q.A.M. 00a24, Universite Aix-Marseille III.
  10. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  11. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  12. MICHEL, Philippe & PESTIEAU, Pierre, . "Fiscal policy when individuals differ with regard to altruism and labor supply," CORE Discussion Papers RP -1381, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
  14. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  15. Emmanuel Thibault & Bruno Decreuse, 2001. "Labor productivity and dynamic efficiency," Economics Bulletin, AccessEcon, vol. 4(13), pages 1-6.
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Citations

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Cited by:
  1. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  2. BRECHET, Thierry & LAMBRECHT, Stéphane, . "Family altruism with renewable resource and population growth," CORE Discussion Papers RP -2094, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Kunze, Lars, 2010. "Capital taxation, long-run growth, and bequests," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1067-1082, December.
  4. Lars Kunze, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 0318, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. BRECHET, Thierry & LAMBRECHT, Stéphane, . "Renewable resource and capital with a joy-of-giving resource bequest motive," CORE Discussion Papers RP -2434, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Seghir, Abdelkrim & Salem, Sherif, 2010. "In nitely-lived agents via two-sided altruism," MPRA Paper 31379, University Library of Munich, Germany.
  7. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.
  8. Kunze, Lars, 2012. "Funded social security and economic growth," Economics Letters, Elsevier, vol. 115(2), pages 180-183.
  9. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
  10. Kirill Borissov, 2013. "The Rich and the Poor in a Simple Model of Growth and Distribution," EUSP Deparment of Economics Working Paper Series Ec-06/13, European University at St. Petersburg, Department of Economics.
  11. Schwarz, Mordechai E. & Sheshinski, Eytan, 2007. "Quasi-hyperbolic discounting and social security systems," European Economic Review, Elsevier, vol. 51(5), pages 1247-1262, July.

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