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Pareto Optimality Of The Golden Rule Equilibrium In An Overlapping Generations Model With Production And Transfers

Author

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  • Mertens, Jean-François
  • Rubinchik, Anna

Abstract

The main result is that the golden rule equilibrium (GRE) is Pareto optimal (in the classical sense) in an overlapping generations (OG) model with constant-returns-to-scale production, transfers, arbitrary life-time productivity and homogeneous instantaneous felicity. In addition, we extend Cass and Yaari's equivalence between efficiency (aggregate consumption dominance) and present value dominance (with evaluation made using a candidate equilibrium price path).

Suggested Citation

  • Mertens, Jean-François & Rubinchik, Anna, 2015. "Pareto Optimality Of The Golden Rule Equilibrium In An Overlapping Generations Model With Production And Transfers," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1780-1799, December.
    • Handle: RePEc:cup:macdyn:v:19:y:2015:i:08:p:1780-1799_00
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    Cited by:

    1. Jean-François Mertens & Anna Rubinchik, 2017. "Discounting and welfare evaluation of policies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(5), pages 903-920, October.
    2. Jean-François Mertens & Anna Rubinchik, 2013. "Equilibria in an overlapping generations model with transfer policies and exogenous growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 537-595, November.
    3. Gregory Ponthiere, 2024. "Fertility, heterogeneity, and the Golden Rule," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    4. Gorokhovsky, Alexander & Rubinchik, Anna, 2022. "Necessary and sufficient conditions for determinacy of asymptotically stationary equilibria in OLG models," Journal of Economic Theory, Elsevier, vol. 204(C).

    More about this item

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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