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

Author

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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).

Suggested Citation

  • MERTENS, Jean-François & RUBINCHIK, Anna, 2012. "Pareto optimality of the golden rule equilibrium in an overlapping generations model with production and transfers," LIDAM Discussion Papers CORE 2012033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2012033
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    References listed on IDEAS

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    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348.
    2. Jean-François Mertens & Anna Rubinchik, 2013. "Equilibria in an overlapping generations model with transfer policies and exogenous growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 537-595, November.
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    Cited by:

    1. Jean-François Mertens & Anna Rubinchik, 2017. "Discounting and welfare evaluation of policies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(5), pages 903-920, October.
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    3. Gregory Ponthiere, 2024. "Fertility, heterogeneity, and the Golden Rule," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    4. Gorokhovsky, Alexander & Rubinchik, Anna, 2022. "Necessary and sufficient conditions for determinacy of asymptotically stationary equilibria in OLG models," Journal of Economic Theory, Elsevier, vol. 204(C).

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    More about this item

    Keywords

    infinite economies; overlapping generations; exogenous growth; golden rule equilibrium;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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