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Trading Off Generations: Infinitely Lived Agent Versus OLG

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  • Schneider, Maik T.
  • Traeger, Christian P.
  • Winkler, Ralph

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 Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt1b58j8m6.

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Date of creation: 26 Jan 2012
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Handle: RePEc:cdl:agrebk:qt1b58j8m6

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Keywords: climate change; intergenerational equity; overlapping generations; time preference; discounting; infinitely lived agents; Social and Behavioral Sciences; Life Sciences;

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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," Munich Reprints in Economics 19746, University of Munich, Department of Economics.
  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.
  3. Habla, Wolfgang & Roeder, Kerstin, 2013. "Intergenerational aspects of ecotax reforms - An application to Germany," Munich Reprints in Economics 20469, University of Munich, Department of Economics.

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