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Optimal intergenerational transfers in an endogenous growth model with fertility change

Author

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  • MARCHAND, Maurice

    (IAG and CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • MICHEL, Philippe

    (CEM, Université de Paris 1, Paris, France)

  • PESTIEAU, Pierre

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve and Université de Liège, B-4000Liège, Belgium)

Abstract

This paper analyzes the direction of optimal intergenerational transfers in a setting of endogenous growth à la Arrow-Romer. It shows that the case for ascending transfers such as implied by pay-as-you-go social security is rather weak. What is rather needed is a subsidy on interest income. When demographic shocks are introduced, during the transition period following an unexpected fertility decline, the case for a transfer from the younger to the older generation appears to be stronger. We compare the market equilibrium and the optimal solution in the two cases of a permanent shock and of a transitory shock.

Suggested Citation

  • MARCHAND, Maurice & MICHEL, Philippe & PESTIEAU, Pierre, 1993. "Optimal intergenerational transfers in an endogenous growth model with fertility change," LIDAM Discussion Papers CORE 1993011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:1993011
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1993.html
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    Citations

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    Cited by:

    1. Claire Loupias & Bertrand Crettez & Isabelle Job, 1997. "Dette publique et croissance endogène," Revue Économique, Programme National Persée, vol. 48(6), pages 1439-1455.
    2. Giammarioli, Nicola & Annicchiarico, Barbara, 2004. "Fiscal rules and sustainability of public finances in an endogenous growth model," Working Paper Series 381, European Central Bank.
    3. Gilles Le Garrec, 2012. "Social security and growth in an aging economy : the case of acturial fairness," Sciences Po publications 2012-18, Sciences Po.
    4. DOCQUIER, Frédéric & PADDISON, Oliver, 2000. "Growth and equality effects of pension plans," LIDAM Discussion Papers CORE 2000036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Luciano Fanti, 2012. "Consequences of a boost of mandatory retirement age on long run income and PAYG pensions," Discussion Papers 2012/149, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Luciano Fanti, 2015. "Growth, PAYG pension systems crisis and mandatory age of retirement," Economics Bulletin, AccessEcon, vol. 35(2), pages 1160-1167.
    7. Barthélémy, Vincent, 2000. "Système éducatif et bien-être social : faut-il subventionner l’éducation?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 521-541, décembre.
    8. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9jiq0m4pg6 is not listed on IDEAS
    9. Alders, Peter & Broer, D. Peter, 2005. "Ageing, fertility, and growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1075-1095, June.

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