A non-dictatorial criterion for optimal growth models
AbstractThere are two main approaches for defining social welfare relations for an economy with infinite horizon. The first one is to consider the set of intertemporal utility streams generated by a general set of bounded consumptions and define a preference relation between them. This relation is ideally required to satisfy two main axioms, the Pareto axiom, which guarantees efficiency and the Anonymity axiom, which guarantees equity. Basu and Mitra (2003) show that it is impossible to represent by a function a preference relation embodying both requirements, and Basu and Mitra (2007) propose and characterize a new welfare criterion called utilitarian social welfare relation. In the same framework, Chichilnisky (1996) proposes two axioms that capture the idea of sustainable growth : non-dictatorship of the present and non-dictatorship of the future, and exhibits a mixed criterion, adding a discounted utilitarian part, which gives a dictatorial role to the present, and a long term part, which gives a dictatorial role to the future. The drawback of Chichilnisky's approach is that it often does not allow to explicity characterize optimal growth paths with optimal control techniques. Our aim is less general than Chichilnisky's and Basu and Mitra's : we want to have a non-dictatorial criterion for optimal growth models. We restrict ourselves to the set of utilities of consumptions which are generated by a specific technology. We show that the undiscounted utilitarian criterion pioneered by Ramsey (1928) is not only convenient if one wants to solve an optimal growth problem but also sustainable, efficient and equitable.
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Date of creation: Apr 2008
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Anonymity; intergenerational equity; natural resources; non-dictatorship of the future; non-dictatorship of the present; optimal growth models; Pareto; social welfare function; social welfare relation; sustainability; utilitarian undiscounted criterion.;
Other versions of this item:
- Alain Ayong Le Kama & Cuong Le Van & Katheline Schubert, 2008. "A non-dictatorial criterion for optimal growth models," Documents de travail du Centre d'Economie de la Sorbonne v08030, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Alain Ayong Le Kama & Cuong Le Van & Katheline Schubert, 2008. "A Non-dictatorial Criterion for Optimal Growth Models," Working Papers 14, Development and Policies Research Center (DEPOCEN), Vietnam.
- D60 - Microeconomics - - Welfare Economics - - - General
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
- Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
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