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Policies for Sustainability: Lessons from an Overlapping Generations Model

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  • Michael C. Farmer
  • Alan Randall

Abstract

Discounting is often considered inimical to sustainability. Reliance on the assumption that endowments regulate the transfer of assets to the future in standard growth models interprets the interest rate in the intergenerational context as a partial reflection of myopia. A more complete market model that allows agents from different generations to engage in long-term contracts with one another severs the movement of capital to the future from the endowment assumption. Adherence to the endowment assumption as a de facto market structure, not simply a modeling convenience, endorses sustainability policies that injure the future.

Suggested Citation

  • Michael C. Farmer & Alan Randall, 1997. "Policies for Sustainability: Lessons from an Overlapping Generations Model," Land Economics, University of Wisconsin Press, vol. 73(4), pages 608-622.
  • Handle: RePEc:uwp:landec:v:73:y:1997:i:4:p:608-622
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    Cited by:

    1. Dalton, Michael & O'Neill, Brian & Prskawetz, Alexia & Jiang, Leiwen & Pitkin, John, 2008. "Population aging and future carbon emissions in the United States," Energy Economics, Elsevier, vol. 30(2), pages 642-675, March.
    2. Toman, Michael & Pezzey, John C., 2002. "The Economics of Sustainability: A Review of Journal Articles," Discussion Papers dp-02-03, Resources For the Future.
    3. Amitrajeet A. Batabyal, 2008. "Public Versus Personal Welfare: An Aspect Of Environmental Policymaking In Developing Countries," World Scientific Book Chapters,in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 13, pages 227-239 World Scientific Publishing Co. Pte. Ltd..
    4. Randall, Alan, 2008. "Is Australia on a sustainability path? Interpreting the clues," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), March.
    5. Alessio Emanuele BIONDO, 2010. "A Growth Rate for a Sustainable Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 7-20.
    6. Yu, Ning & Shi, Qinghua & Jin, Hongtao, 2010. "Permanent land-use rights and endowment insurance: Chinese evidence of the substitution effect," China Economic Review, Elsevier, vol. 21(2), pages 272-281, June.
    7. Clayton, Helena & Brennan, Donna C., 1999. "A review of economic issues for sustainable shrimp farming in the Mekong Delta, Vietnam," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123794, Australian Agricultural and Resource Economics Society.
    8. Gerlagh, Reyer & van der Zwaan, B. C. C., 2001. "The effects of ageing and an environmental trust fund in an overlapping generations model on carbon emission reductions," Ecological Economics, Elsevier, vol. 36(2), pages 311-326, February.
    9. Lin, Brian Chi-ang, 2006. "A sustainable perspective on the knowledge economy: A critique of Austrian and mainstream views," Ecological Economics, Elsevier, vol. 60(1), pages 324-332, November.
    10. Adile TAMGUICHT, 2007. "Public versus personal welfare: an aspect of environmental policymaking in developing countries," Economics Bulletin, AccessEcon, vol. 15(9), pages 1-10.
    11. Richard T. Woodward & Richard C. Bishop, 2003. "Sector-Level Decisions in a Sustainability-Constrained Economy," Land Economics, University of Wisconsin Press, vol. 79(1), pages 1-14.

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