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Intergenerational altruism and the transfer paradox in an overlapping generations model

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  • Hamada, Kojun
  • Yanagihara, Mitsuyoshi

Abstract

This study investigates how intergenerational altruism affects the possibility of the transfer paradox occurring in a two-country, one-sector overlapping generations model. We derive the conditions under which the transfer paradox occurs in our model where a generation within each country has altruism toward the subsequent generation. Contrary to earlier results in the literature, we find that altruism does not enter the conditions under which the transfer paradox occurs in the steady state. Moreover, we show that although altruism affects the condition of the transfer paradox along the transition path, its effect on this condition vanishes as the economy converges to the steady state.

Suggested Citation

  • Hamada, Kojun & Yanagihara, Mitsuyoshi, 2016. "Intergenerational altruism and the transfer paradox in an overlapping generations model," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 161-167.
  • Handle: RePEc:eee:quaeco:v:59:y:2016:i:c:p:161-167
    DOI: 10.1016/j.qref.2015.04.001
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    More about this item

    Keywords

    Intergenerational altruism; Transfer paradox; Overlapping generations model;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid

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