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Pareto optimality of the golden rule equilibrium in an overlapping generations model with production and transfers

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  • MERTENS, Jean-François

    (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium.)

  • RUBINCHIK, Anna

    ()
    (University of Haifa, Department of Economics, Israel.)

Abstract

The main result is that the golden rule equilibrium (GRE) is Pareto optimal (in the classical sense) in an overlapping generations (OG) model with constant-returns-to-scale production, transfers, arbitrary life-time productivity and CES instantaneous felicity. In addition, we extend Cass and Yaari's [10] equivalence between efficiency (aggregate consumption dominance) and the present value dominance (with evaluation made using a candidate equilibrium price path).

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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 2012033.

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Date of creation: 14 Sep 2012
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Handle: RePEc:cor:louvco:2012033

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Keywords: infinite economies; overlapping generations; exogenous growth; golden rule equilibrium;

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  1. Mendolicchio, Concetta & Paolini, Dimitri & Pietra, Tito, 2012. "Asymmetric information and overeducation," IAB Discussion Paper 201214, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, October.
  3. MERTENS, Jean-François & RUBINCHIK, Anna, 2012. "Equilibria in an overlapping generations model with transfer policies and exogenous growth," CORE Discussion Papers 2012032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Gaertner,Wulf & Schokkaert,Erik, 2011. "Empirical Social Choice," Cambridge Books, Cambridge University Press, number 9781107013940.
  5. Okuno, Masahiro & Zilcha, Itzhak, 1983. "Optimal steady-state in stationary consumption-loan type models," Journal of Economic Theory, Elsevier, vol. 31(2), pages 355-363, December.
  6. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521887427.
  7. Duc, Francois & Ghiglino, Christian, 1998. "Optimality of Barter steady states," Journal of Economic Dynamics and Control, Elsevier, vol. 22(7), pages 1053-1067, May.
  8. Burke, Jonathan L, 1995. "Existence of a Pareto-Optimal Equilibrium in Nearly-Stationary Overlapping-Generations Economies," Economic Theory, Springer, vol. 5(2), pages 247-61, March.
  9. Christian Ghiglino & Mich Tvede, . "No-trade and uniqueness of steady-states," Preprints _002, Theory and Mathematics of the Economy and the Society.
  10. Cass, David, 1972. "On capital overaccumulation in the aggregative, neoclassical model of economic growth: A complete characterization," Journal of Economic Theory, Elsevier, vol. 4(2), pages 200-223, April.
  11. 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.
  12. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
  13. Cass, David & Okuno, Masahiro & Zilcha, Itzhak, 1979. "The role of money in supporting the pareto optimality of competitive equilibrium in consumption-loan type models," Journal of Economic Theory, Elsevier, vol. 20(1), pages 41-80, February.
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