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Capital accumulation and fiscal policy in an OLG model with family altruism

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  • LAMBRECHT, Stéphane
  • MICHEL, Philippe
  • THIBAULT, Emmanuel

Abstract

The idea of family altruism is that parents care only about their children's income and not about the use of this income made by the children. First, we establish dynamical properties which place the OLG model with family altruism halfway between the model with pure life-cyclers (Diamond (1965)) and the one with dynastic altruism (Barro (1974)). Then, we show that this concept leads to interesting fiscal policy conclusions less clear-cut and more realistic than those obtained with the two previous standard OLG models: a pay as you go social security is neutral but not a public debt.

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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 2005027.

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Date of creation: 00 2005
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Handle: RePEc:cor:louvco:2005027

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Keywords: altruism; fiscal policy; equilibrium;

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References

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  1. Shone,Ronald, 2002. "Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521017039, December.
  2. Michel, Philippe & Pestieau, Pierre, 1999. " Fiscal Policy When Individuals Differ With Regard to Altruism and Labor Supply," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 187-203.
  3. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
  4. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521806428, December.
  5. 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..
  6. N. Gregory Mankiw, 1999. "The Savers-Spenders Theory of Fiscal Policy," Harvard Institute of Economic Research Working Papers 1888, Harvard - Institute of Economic Research.
  7. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  8. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  9. Larry E. Jones & Rodolfo E. Manuelli, 1990. "Finite Lifetimes and Growth," NBER Working Papers 3469, National Bureau of Economic Research, Inc.
  10. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
  11. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2004. "Intergenerational altruism and neoclassical growth models," Working Paper Series 0386, European Central Bank.
  12. Lambrecht, S. & Michel, P. & Thibault, E., 2000. "Intertemporal Equilibrium with Myopic Altruism," G.R.E.Q.A.M. 00a24, Universite Aix-Marseille III.
  13. MICHEL, Ph. & PESTIEAU, P., . "Fiscal policy in a growth model with both altruistic and nonaltruistic agents," CORE Discussion Papers RP -1301, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  15. Emmanuel Thibault & Bruno Decreuse, 2001. "Labor productivity and dynamic efficiency," Economics Bulletin, AccessEcon, vol. 4(13), pages 1-6.
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Cited by:
  1. BRECHET, Thierry & LAMBRECHT, Stéphane, . "Renewable resource and capital with a joy-of-giving resource bequest motive," CORE Discussion Papers RP -2434, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. BRECHET, Thierry & LAMBRECHT, Stéphane, . "Family altruism with renewable resource and population growth," CORE Discussion Papers RP -2094, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Lars Kunze, 2009. "Capital Taxation, Long-run Growth, and Bequests," Ruhr Economic Papers 0113, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Schwarz, Mordechai E. & Sheshinski, Eytan, 2007. "Quasi-hyperbolic discounting and social security systems," European Economic Review, Elsevier, vol. 51(5), pages 1247-1262, July.
  5. Seghir, Abdelkrim & Salem, Sherif, 2010. "In nitely-lived agents via two-sided altruism," MPRA Paper 31379, University Library of Munich, Germany.
  6. Kunze, Lars, 2012. "Funded social security and economic growth," Economics Letters, Elsevier, vol. 115(2), pages 180-183.

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