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Intergenerational Transfers, Lifetime Welfare and Resource Preservation

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  • Simone Valente

    (ETH Zurich - Institute of Economic Research)

Abstract

This paper studies the welfare properties of distortionary transfers in a life-cycle growth model where natural capital is private property. The main result is that, under credible pre-commitment, each newborn generation prefers positive taxes-subsidies to laissez-faire conditions when the resource share in production is sufficiently high. By increasing the degree of natural preservation, resource-saving policies raise welfare of all generations except that of the first resource owner, who suffers a deadweight loss due to taxation of the initial stock. If the first owner renounces part of his claims over initial endowments, all successive generations support resource-saving policies for purely selfish reasons.

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File URL: http://128.118.178.162/eps/pe/papers/0505/0505008.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0505008.

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Length: 23 pages
Date of creation: 19 May 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0505008

Note: Type of Document - pdf; pages: 23
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Web page: http://128.118.178.162

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Keywords: Distortionary Taxation; Intergenerational Transfers; Overlapping Generations; Renewable Resources; Sustainability.;

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Citations

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Cited by:
  1. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," CER-ETH Economics working paper series 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. Valente, Simone, 2011. "Habit formation and resource dependence in dynastic economies," Mathematical Social Sciences, Elsevier, vol. 61(3), pages 131-145, May.
  3. Valente, Simone, 2011. "Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion," Resource and Energy Economics, Elsevier, vol. 33(4), pages 995-1014.

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