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Trading Off Generations: Infinitely Lived Agent Versus OLG

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  • Maik T. Schneider
  • Christian Traeger
  • Ralph Winkler

Abstract

The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived 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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-02/cesifo1_wp3743.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3743.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3743

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Related research

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

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References

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  1. Christoph Heinzel & Ralph Winkler, 2011. "Distorted Time Preferences and Time-to-Build in the Transition to a Low-Carbon Energy Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(2), pages 217-241, June.
  2. Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
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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. Habla, Wolfgang & Roeder, Kerstin, 2013. "Intergenerational aspects of ecotax reforms – An application to Germany," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 301-318.
  3. 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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