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A Closed-Form Solution To A Model Of Two-Sided, Partial Altruism


  • Fernandes, Ana


This paper presents a closed-form characterization of the allocation of resources in an overlapping generations model of two-sided, partial altruism. Three assumptions are made: (i) parents and children play Markov strategies, (ii) utility takes the CRRA form, and (iii) the income of children is stochastic but proportional to the saving of parents. In families where children are rich relative to their parents, saving rates—measured as a function of the family's total resources—are higher than when children are poor relative to their parents. Income redistribution from the old to the young, therefore, leads to an increase in aggregate saving.

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  • Fernandes, Ana, 2012. "A Closed-Form Solution To A Model Of Two-Sided, Partial Altruism," Macroeconomic Dynamics, Cambridge University Press, vol. 16(02), pages 230-239, April.
  • Handle: RePEc:cup:macdyn:v:16:y:2012:i:02:p:230-239_00

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    1. Jean-Pierre Vidal & Michael Bräuninger, 2000. "Private versus public financing of education and endogenous growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(3), pages 387-401.
    2. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1001-1026.
    3. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    4. Nakajima, Tetsuya & Nakamura, Hideki, 2009. "The price of education and inequality," Economics Letters, Elsevier, vol. 105(2), pages 183-185, November.
    5. Moav, Omer, 2002. "Income distribution and macroeconomics: the persistence of inequality in a convex technology framework," Economics Letters, Elsevier, vol. 75(2), pages 187-192, April.
    6. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    7. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 85-117.
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