On the Existence and Characterization of Markovian Equilibrium in Models with Simple Non-paternalistic Altruism
AbstractThis paper presents results on existence and characterization of Markov equilibrium for a broad class of models with intergenerational altruism frequently used in the macroeconomic literature. In these models, parents are assumed to have a simple non-paternalistic utility, as each generation derives utility from its own consumption and the utility of the next generation. Models with simple nonpaternalistic altruism are widely used (Barro , Barro and Becker, Loury ), but results establishing existence and characterizations of equilibrium are surprisingly few and incomplete. Most important is the seminal work of Ray  demonstrating the existence of an indirect utility function and a saving policy such that it is optimal for each generation to follow that particular policy, providing its descendants use the same policy, and that the indirect utility function is the same for all generations. In addition, the optimal saving policy is shown to be an increasing function of current endowments. Ray focuses on existence, and there is no characterization of the set of equilibria, no indications on how to compute them, and no conditions under which the equilibrium can be shown to be unique. This paper addresses these concerns.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Department of Economics, W. P. Carey School of Business, Arizona State University in its series Working Papers with number 2133478.
Date of creation:
Date of revision:
Other versions of this item:
- Olivier F. Morand & Kevin L. Reffett, 2002. "On the Existence and Characterization of Markovian Equilibrium in Models with Simple Non-Paternalistic Altruism," Working papers 2002-06, University of Connecticut, Department of Economics.
- NEP-ALL-2005-05-14 (All new papers)
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.:
- Olivier F. Morand & Kevin L. Reffett, 2001.
"Existence and Uniqueness of Equilibrium in Nonoptimal Unbounded Infinite Horizon Economies,"
2001-02, University of Connecticut, Department of Economics.
- Morand, Olivier F. & Reffett, Kevin L., 2003. "Existence and uniqueness of equilibrium in nonoptimal unbounded infinite horizon economies," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1351-1373, September.
- Olivier F. Morand & Kevin L. Reffett, 2002. "Existence and Uniqueness of Equilibrium in Nonoptimal Unbounded Infinite Horizon Economies," Tinbergen Institute Discussion Papers 02-085/2, Tinbergen Institute.
- Manjira Datta & Leonard Mirman & Kevin Reffett, .
"Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor,"
2132846, Department of Economics, W. P. Carey School of Business, Arizona State University.
- Datta, Manjira & Mirman, Leonard J. & Reffett, Kevin L., 2002. "Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor," Journal of Economic Theory, Elsevier, vol. 103(2), pages 377-410, April.
- Coleman, Wilbur John, II, 1991.
"Equilibrium in a Production Economy with an Income Tax,"
Econometric Society, vol. 59(4), pages 1091-1104, July.
- Wilbur John Coleman II, 1989. "Equilibrium in a production economy with an income tax," International Finance Discussion Papers 366, Board of Governors of the Federal Reserve System (U.S.).
- Barro, R.J. & Becker, G.S., 1988.
"Fertility Choice In A Model Of Economic Growth,"
University of Chicago - Economics Research Center
88-8, Chicago - Economics Research Center.
- Robert J. Barro & Gary S. Becker, . "Fertility Choice in a Model of Economic Growth," University of Chicago - Population Research Center 88-8, Chicago - Population Research Center.
- Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
- 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..
- Ray, Debraj, 1987. "Nonpaternalistic intergenerational altruism," Journal of Economic Theory, Elsevier, vol. 41(1), pages 112-132, February.
- Sundaram, Rangarajan K., 1989. "Perfect equilibrium in non-randomized strategies in a class of symmetric dynamic games," Journal of Economic Theory, Elsevier, vol. 47(1), pages 153-177, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Steve Salik).
If references are entirely missing, you can add them using this form.