This chapter surveys intergenerational altruism in neoclassical growth models. It first examines Barro's approach to intergenerational altruism, whereby successive generations are linked by recursive altruistic preferences. Individuals have an altruistic concern only for their children, who in turn also have altruistic feelings for their own children. Through such a recursive relation all generations of a single family (a dynasty) are linked together by a chain of private intergenerational transfers, countervailing any attempt by the government to redistribute resources across generations. This offsetting of public by private transfers operates only if bequests are positive. This is an important qualification to Barro's debt neutrality result. The conditions under which the Ricardian equivalence (debt neutrality) theorem applies are specified. The effectiveness of fiscal policy is further analysed in the context of an economy populated by heterogeneous families differing with respect to their degree of intergenerational altruism. We also examine other forms of dynastic altruism consistent with Barro's recursive definition of altruism, ascending altruism and two-sided altruism. These forms could be expected to deliver debt neutrality unconditionally, as families leaving zero bequests could be families characterised by child-to-parent gift under ascending altruism. We find that this is not the case and no form of dynastic altruism therefore ensures debt neutrality without condition. Even under two-sided altruism there are cases, in which both bequests and gifts are constrained and fiscal policy remains effective. We then review ad hoc forms of altruism and their implications for the debt neutrality results. Only one specific form of ad hoc altruism always guarantees debt neutrality; this form departs from the recursive approach underpinning dynastic altruism, with its objective function being formally equivalent to that of the social planner. Extensions to the fields of education and environmental are presented in a final section.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF This chapter was published in: S. Kolm & Jean Mercier Ythier (ed.) , Elsevier, chapter 15, pages 1055-1106, 2006.
Find related papers by JEL classification: Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)