A Strategic Altruism Model in Which Ricardian Equivalence Does Not Hold
This article demonstrates that Ricardian equivalence does not necessarily hold in models with altruistic transfers once one takes into account the strategic behavior of recipients as well as donors. To influence the final allocation of consumption in altruistic settings, potential recipients can threaten to refuse transfers. The authors apply the extended Nash bargaining solution to the problem of an altruistic parent and a possible altruistic child. They show that when the government redistributes between the parent and child, it changes their endowments and the equilibrium threats and, thus, the final allocation of consumption. Copyright 1990 by Royal Economic Society.
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Volume (Year): 100 (1990)
Issue (Month): 403 (December)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"The Effects of Fiscal Policies when Incomes Are Uncertain: A Contradiction to Ricardian Equivalence,"
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American Economic Association, vol. 78(1), pages 14-23, March.
- Martin Feldstein, 1986. "The Effects of Fiscal Policies When Incomes are Uncertain: A Contradiction to Ricardian Equivalence," NBER Working Papers 2062, National Bureau of Economic Research, Inc.
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- Kimball, Miles S., 1987. "Making sense of two-sided altruism," Journal of Monetary Economics, Elsevier, vol. 20(2), pages 301-326, September.
- Carmichael, Jeffrey, 1982. "On Barro's Theorem of Debt Neutrality: The Irrelevance of Net Wealth," American Economic Review, American Economic Association, vol. 72(1), pages 202-213, March.
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