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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;

References

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  1. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  2. 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.
  3. S. Rao Aiyagari, 1987. "Equilibrium existence in an overlapping generations model with altruistic preferences," Working Papers 356, Federal Reserve Bank of Minneapolis.
  4. Michel, Philippe, 1990. "Some Clarifications on the Transversality Condition," Econometrica, Econometric Society, vol. 58(3), pages 705-23, May.
  5. 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.
  6. David Altig & Steve J. Davis, 1991. "The Timing of Intergenerational Transfers, Tax Policy, and Aggregate Savings," NBER Working Papers 3753, National Bureau of Economic Research, Inc.
  7. Arrondel, L. & Masson, A. & Pestieau, P., 1996. "Bequest and inheritance: empirical issues and France-U.S. comparison," DELTA Working Papers 96-19, DELTA (Ecole normale supérieure).
  8. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
  9. Haltiwanger, John & Waldman, Michael, 1993. "The role of altruism in economic interaction," Journal of Economic Behavior & Organization, Elsevier, vol. 21(1), pages 1-15, May.
  10. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834.
  11. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  12. Perotti, Roberto, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 755-76, October.
  13. 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.
  14. 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.
  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. 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.
  2. Helmuth Cremer & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Economics Working Paper Archive wp_394, Levy Economics Institute, The.
  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. Kirill Borissov & Stéphane Lambrecht, 2009. "Growth and distribution in an AK-model with endogenous impatience," Economic Theory, Springer, vol. 39(1), pages 93-112, April.
  5. LAMBRECHT, Stéphane & MICHEL, Philippe & THIBAULT, Emmanuel, 2005. "Capital accumulation and fiscal policy in an OLG model with family altruism," CORE Discussion Papers 2005027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. 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).
  7. 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.
  8. Laitner, John, 2001. "Secular Changes in Wealth Inequality and Inheritance," Economic Journal, Royal Economic Society, vol. 111(474), pages 691-721, October.
  9. 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).
  10. 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.
  11. 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).

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