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Fiscal Policy in a Growth Model with Both Altruistic and Nonaltruistic Agents

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  • Philippe Michel
  • Pierre Pestieau

Abstract

This paper examines the long‐run behavior of an overlapping generations model with a population consisting of altruistic and nonaltruistic agents. It also studies the effect of fiscal policy on aggregate capital accumulation and on the welfare of both types of agents. It shows that an increase in the relative number of nonaltruists is Pareto‐improving in the steady state. It also shows that the introduction of public debt or unfunded social security has no effect on the long‐run equilibrium but implies a transfer of resources from the nonaltruistic to the altruistic agents. Finally, it indicates that inheritance taxation hurts not only the altruists but also the nonaltruists.

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  • Philippe Michel & Pierre Pestieau, 1998. "Fiscal Policy in a Growth Model with Both Altruistic and Nonaltruistic Agents," Southern Economic Journal, John Wiley & Sons, vol. 64(3), pages 682-697, January.
    • Handle: RePEc:wly:soecon:v:64:y:1998:i:3:p:682-697
    DOI: 10.1002/j.2325-8012.1998.tb00087.x
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    Cited by:

    1. Emanuela Cardia & Serena Ng, 1997. "How Important are Intergenerational Transfers of Time? A Macroeconomic Analysis," Boston College Working Papers in Economics 395, Boston College Department of Economics.
    2. Laitner, John, 2001. "Secular Changes in Wealth Inequality and Inheritance," Economic Journal, Royal Economic Society, vol. 111(474), pages 691-721, October.
    3. Helmuth Cremer & ) & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Public Economics 0311003, University Library of Munich, Germany.
    4. Jordi Caballé & Luisa Fuster, 2000. "Pay-as-you-go social security and the distribution of bequests," Economics Working Papers 468, Department of Economics and Business, Universitat Pompeu Fabra.
    5. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
    6. Stéphane Lambrecht & Philippe Michel & Emmanuel Thibault, 2006. "Capital Accumulation and Fiscal Policy in an OLG Model with Family Altruism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(3), pages 465-486, August.
    7. Vidal, Jean-Pierre, 2000. "Capital Mobility in a Dynastic Framework," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 606-625, July.
    8. Nourry, Carine & Venditti, Alain, 2001. "Determinacy of Equilibrium in an Overlapping Generations Model with Heterogeneous Agents," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 230-255, January.
    9. Emmanuel Thibault, 2008. "Dynamic efficiency and intergenerational altruism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 679-687, July.
    10. Yang, Fang, 2013. "Social security reform with impure intergenerational altruism," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 52-67.
    11. Cardia, Emanuela & Michel, Philippe, 2004. "Altruism, intergenerational transfers of time and bequests," Journal of Economic Dynamics and Control, Elsevier, vol. 28(8), pages 1681-1701, June.
    12. MICHEL, Philippe & PESTIEAU, Pierre, 2002. "Fiscal policy with agents differing in altruism and in ability," LIDAM Discussion Papers CORE 2002049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Borissov, Kirill, 2002. "Indeterminate steady-state equilibria in a one-sector model," Economics Letters, Elsevier, vol. 77(1), pages 125-130, September.
    14. MICHEL, Philippe & PESTIEAU, Pierre, 1998. "Fiscal policy when individuals differ regarding to altruism and labor supply," LIDAM Discussion Papers CORE 1998040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Vidal, J.-P., 1999. "Capital Mobility in a Dynastic Framework," G.R.E.Q.A.M. 99a21, Universite Aix-Marseille III.
    16. Kirill Borissov & Stefano Bosi & Thai Ha-Huy & Mikhail Pakhnin, 2023. "Heterogeneous Bequests and Social Inequalities," CESifo Working Paper Series 10717, CESifo.
    17. Gevers, Louis & Michel, Philippe, 1998. "Economic Dynasties with Intermissions," Games and Economic Behavior, Elsevier, vol. 25(2), pages 251-271, November.
    18. MICHEL, Philippe & PESTIEAU, Pierre, 2001. "Fiscal policy in a growth model with bequest-as-consumption," LIDAM Discussion Papers CORE 2001009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    19. Kirill Borissov & Stéphane Lambrecht, 2009. "Growth and distribution in an AK-model with endogenous impatience," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 39(1), pages 93-112, April.
    20. Lines, Marji, 2001. "The dynamics of capital accumulation in an overlapping generations model," Structural Change and Economic Dynamics, Elsevier, vol. 12(1), pages 75-89, March.

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