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Capital Accumulation and Fiscal Policy in an OLG Model with Family Altruism

  • STÉPHANE LAMBRECHT
  • PHILIPPE MICHEL
  • EMMANUEL THIBAULT

The idea of family altruism is that parents care only about their children's income and not about the use of this income made by the children. First, we establish dynamical properties which place the OLG model with family altruism halfway between the model with pure life-cyclers ( Diamond 1965 ; American Economic Review 55, 1126-1150) and the one with dynastic altruism ( Barro 1974 ; Journal of Political Economy 82, 1095-1117). Then, we show that this concept leads to interesting fiscal policy conclusions less clear-cut and more realistic than those obtained with the two previous standard OLG models: a pay-as-you-go social security is neutral but not a public debt. Copyright 2006 Blackwell Publishing, Inc..

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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 8 (2006)
Issue (Month): 3 (08)
Pages: 465-486

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Handle: RePEc:bla:jpbect:v:8:y:2006:i:3:p:465-486
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  4. Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center 84-10, Chicago - Population Research Center.
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  8. MICHEL, Philippe & PESTIEAUÂ , Pierre, 1994. "Fiscal Policy in a Growth Model with Both Altruistic and Non Altruistic Agents," CORE Discussion Papers 1994049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  10. Emmanuel Thibault & Bruno Decreuse, 2001. "Labor productivity and dynamic efficiency," Economics Bulletin, AccessEcon, vol. 4(13), pages 1-6.
  11. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  12. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
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  14. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  15. Michel, Philippe & Pestieau, Pierre, 1999. " Fiscal Policy When Individuals Differ With Regard to Altruism and Labor Supply," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 187-203.
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