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Fiscal Policy in a Growth Model with Both Altruistic and Non Altruistic Agents

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Author Info

  • MICHEL, Philippe

    (IUF, LEQAM and GREQAM University of Aix-Marseille II)

  • PESTIEAU , Pierre

    (CORE, Universite catholique de Louvain and Universite de Liege and Paris X.)

Abstract

This paper examines the long-run behavior of an overlapping-generations model with a population consisting of altruistic and non-altruistic agents. It also studies the effect of fiscal policy on aggregate capital accumulation and on the welfare of both types of agents. It shows that an increase in the relative number of non-altruists is Pareto-improving in the steady-state. It also shows that the introduction of public debt or unfunded social security has no effect on the long-run equilibrium but implies a transfer of resources from the non-altruistic to the altruistic agents. Finally, it indicates that inheritance taxation hurts not only the altruists but also the nonaltruists.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1994049.

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Date of creation: 01 Oct 1994
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Handle: RePEc:cor:louvco:1994049

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Related research

Keywords: altruism; Ricardian equivalence; fiscal policy;

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References

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  1. Michel, Philippe, 1990. "Some Clarifications on the Transversality Condition," Econometrica, Econometric Society, vol. 58(3), pages 705-23, May.
  2. 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..
  3. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
  4. David Altig & Steve J. Davis, 1989. "The timing of intergenerational transfers, tax policy, and aggregate savings," Working Paper 8917, Federal Reserve Bank of Cleveland.
  5. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  6. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  7. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
  8. Arrondel, L. & Masson, A. & Pestieau, P., . "Bequests and inheritance: empirical issues and France-U.S. comparison," CORE Discussion Papers RP -1274, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Laitner, John, 1992. "Random earnings differences, lifetime liquidity constraints, and altruistic intergenerational transfers," Journal of Economic Theory, Elsevier, vol. 58(2), pages 135-170, December.
  10. Perotti, Roberto, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 755-76, October.
  11. Rao Aiyagari, S., 1989. "Equilibrium existence in an overlapping generations model with altruistic preferences," Journal of Economic Theory, Elsevier, vol. 47(1), pages 130-152, February.
  12. Muller, Walter III & Woodford, Michael, 1988. "Determinacy of equilibrium in stationary economies with both finite and infinite lived consumers," Journal of Economic Theory, Elsevier, vol. 46(2), pages 255-290, December.
  13. John Haltiwanger & Michael Waldman, 1986. "The Role of Altruism in Economic Interaction," UCLA Economics Working Papers 391, UCLA Department of Economics.
  14. Wolff, Edward N, 1996. "International Comparisons of Wealth Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 433-51, December.
  15. Weil, Philippe, 1987. "Love thy children : Reflections on the Barro debt neutrality theorem," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 377-391, May.
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Citations

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Cited by:
  1. Stéphane Lambrecht & Philippe Michel & Emmanuel Thibault, 2006. "Capital Accumulation and Fiscal Policy in an OLG Model with Family Altruism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(3), pages 465-486, 08.
  2. John Laitner, 2001. "Secular Changes in Wealth Inequality and Inheritance," Working Papers wp020, University of Michigan, Michigan Retirement Research Center.
  3. Emanuela Cardia & Serena Ng, 1997. "How Important are Intergenerational Transfers of Time? A Macroeconomic Analysis," Boston College Working Papers in Economics 395, Boston College Department of Economics.
  4. Emmanuel Thibault, 2008. "Dynamic efficiency and intergenerational altruism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 679-687, July.
  5. Cardia, Emanuela & Michel, Philippe, 2004. "Altruism, intergenerational transfers of time and bequests," Journal of Economic Dynamics and Control, Elsevier, vol. 28(8), pages 1681-1701, June.
  6. BORISSOV, Kirill & LAMBRECHT, Stéphane, . "Growth and distribution in an AK-model with endogenous impatience," CORE Discussion Papers RP -2134, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. MICHEL, Philippe & PESTIEAU, Pierre, 2002. "Fiscal policy with agents differing in altruism and in ability," CORE Discussion Papers 2002049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Jordi Caballé & Luisa Fuster, 2000. "Pay-as-you-go social security and the distribution of bequests," Economics Working Papers 468, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Helmuth Cremer & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Economics Working Paper Archive wp_394, Levy Economics Institute.
  10. MICHEL, Philippe & PESTIEAU, Pierre, 2001. "Fiscal policy in a growth model with bequest-as-consumption," CORE Discussion Papers 2001009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. MICHEL, Philippe & PESTIEAU, Pierre, 1998. "Fiscal policy when individuals differ regarding to altruism and labor supply," CORE Discussion Papers 1998040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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