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Innovative investments, natural resources, and intergenerational fairness : are pension funds good for sustainable development?

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Author Info
Lucas Bretschger () (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
Karen Pittel () (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))

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Abstract

We analyse long-term consumption paths in a dynamic two-sector economy with overlapping generations. Each young generation saves for the retirement age, both with private savings and pension funds. The productivity of each sector can be raised by sector-specific research while the essential use of a non-renewable natural resource poses a threat to consumption possibilities in the long run. Bonds, the two types innovations, and resource stocks are the different investment opportunities. We show that pension funds have a positive impact on long-term development, provided that individuals have a preference for own investments. In this case, sustainability is more likely to be achieved due to pension fund savings.

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Publisher Info
Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series Economics working paper series with number 05/36.

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Length: 30 pages
Date of creation: Feb 2005
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Handle: RePEc:eth:wpswif:05-36

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Related research
Keywords: Pension funds sustainable development financial investments overlapping generations

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Find related papers by JEL classification:
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - -
Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
G23 - Financial Economics - - Financial Institutions and Services - - - Pension Funds; Other Private Financial Institutions

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    Other versions:
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    Other versions:
  20. Lans Bovenberg, A. & Smulders, Sjak, 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Journal of Public Economics, Elsevier, vol. 57(3), pages 369-391, July. [Downloadable!] (restricted)
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  27. Martin Barbie & Marcus Hagedorn & Ashok Kaul, 2000. "mic Efficiency and Pareto Optimality in a Stochastic OLG Model with Production and Social Security," Bonn Econ Discussion Papers bgse8_2000, University of Bonn, Germany, revised Jun 2000. [Downloadable!]
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