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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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Related research

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

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  1. Fleurbaey,Marc & Maniquet,Fran‡ois, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521887427.
  2. Christian Ghiglino & Mich Tvede, . "No-trade and uniqueness of steady-states," Preprints _002, Theory and Mathematics of the Economy and the Society.
  3. 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.
  4. 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).
  5. Concetta Mendolicchio & Dimitri Paolini & Tito Pietra, 2012. "Asymmetric Information And Overeducation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 47.
  6. 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.
  7. 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.
  8. 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.
  9. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
  10. 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, July.
  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. Duc, Francois & Ghiglino, Christian, 1998. "Optimality of Barter steady states," Journal of Economic Dynamics and Control, Elsevier, vol. 22(7), pages 1053-1067, May.
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