Dynamic efficiency and intergenerational altruism
Can dynamic inefficiency that may occur in societies populated by non altruistic agents be removed by introducing intergenerational altruism ? Although the answer (see Abel, 1987, AER or Weil, 1987, JME) seems to be negative, this paper shows, by means of a simple example, that the presence of an arbitrarily low proportion of altruists can be sufficient to prevent a society from reaching a non Pareto optimal equilibrium. Intergenerational transfers from the old to the young can therefore provide an alternative ---to public debt, fiat money or money bubbles which transfer goods from the young to the old--- solution to the dynamic efficiency problem. (Copyright: Elsevier)
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Volume (Year): 11 (2008)
Issue (Month): 3 (July)
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