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Optimal growth path in an OLG economy without time-preference assumptions (full text)

Author

Listed:
  • Mohamed Mabrouk

    (Ecole Supérieure de Statistique et d'Analyse de l'Information de Tunis)

Abstract

The aim is to characterize optimal growth paths in an OLG economy where capital accumulation is achieved through bequests, without using the assumption of time preference theory on a social level, because such an assumption, that leads to use a discounted infinite horizon sum, introduce necessarily inequality between the different generations of the society. I investigated two optimality concepts: Pareto-optimality and consensual optimality. I considered the case without technical change. I found that all steady-state optimal growth paths converge necessarily to a level of capital where the marginal gain from a decrease of bequest is equal to the marginal loss from a similar decrease of heritage. With the use of an intergenerational altruistic utility, I showed that spontaneous equilibrium cannot be an optimal growth path unless generations feel (asymptotically) for their heirs as they feel for themselves.

Suggested Citation

  • Mohamed Mabrouk, 2005. "Optimal growth path in an OLG economy without time-preference assumptions (full text)," GE, Growth, Math methods 0510006, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpge:0510006
    Note: Type of Document - pdf; pages: 46. This paper gives the detailed proofs of 'Optimal growth path in an OLG economy without time- preference assumptions: main results'
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/0510/0510006.pdf
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    Citations

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    Cited by:

    1. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth II: Pareto optimality and some economic interpretations," GE, Growth, Math methods 0511007, University Library of Munich, Germany.
    2. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth I: Consensual optimality," GE, Growth, Math methods 0510013, University Library of Munich, Germany.
    3. Mabrouk, Mohamed, 2006. "Allais-anonymity as an alternative to the discounted-sum criterion in the calculus of optimal growth I: Consensual optimality," MPRA Paper 10512, University Library of Munich, Germany.

    More about this item

    Keywords

    optimal growth; time-preference; egalitarianism; Pareto- optimality; golden-rule; OLG economy;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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