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Trading off generations: infinitely lived agent versus OLG

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Author Info

  • Schneider, Maik T.

    () (Center of Economic Research at ETH Zurich)

  • Traeger, Christian P.

    () (University of California, Berkeley. Dept of agricultural and resource economics)

  • Winkler, Ralph

    () (University of Bern)

Abstract

The prevailing literature discusses intergenerational trade-offs in climatechange predominantly in terms of the Ramsey equation relying on the infinitelylived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: First, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.

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Bibliographic Info

Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1093R2.

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Length: 42 pages
Date of creation: Mar 2007
Date of revision: Jan 2012
Handle: RePEc:are:cudare:1093r2

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Related research

Keywords: climate change; intergenerational equity; overlapping generations; time preference; discounting; infinitely lived agents;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Trading Off Generations: Infinitely-Lived Agent Versus OLG
    by Christian Zimmermann in NEP-DGE blog on 2010-06-07 02:25:03
  2. Trading Off Generations: Infinitely-Lived Agent Versus OLG
    by Christian Zimmermann in NEP-DGE blog on 2010-05-04 00:46:22
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Cited by:
  1. Roeder, Kerstin & Habla, Wolfgang, 2012. "The Political Sustainability of Germany's Environmental Tax Rate," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62060, Verein für Socialpolitik / German Economic Association.
  2. Larry S. Karp, 2012. "Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes," CESifo Working Paper Series 3895, CESifo Group Munich.

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