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Capital accumulation and fiscal policy in an OLG model with family altruism

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  • LAMBRECHT, Stéphane
  • MICHEL, Philippe
  • THIBAULT, Emmanuel

Abstract

The idea of family altruism is that parents care only about their children's income and not about the use of this income made by the children. First, we establish dynamical properties which place the OLG model with family altruism halfway between the model with pure life-cyclers (Diamond (1965)) and the one with dynastic altruism (Barro (1974)). Then, we show that this concept leads to interesting fiscal policy conclusions less clear-cut and more realistic than those obtained with the two previous standard OLG models: a pay as you go social security is neutral but not a public debt.

Suggested Citation

  • LAMBRECHT, Stéphane & MICHEL, Philippe & THIBAULT, Emmanuel, 2005. "Capital accumulation and fiscal policy in an OLG model with family altruism," CORE Discussion Papers 2005027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2005027
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    References listed on IDEAS

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    1. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
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    5. MICHEL, Philippe & PESTIEAU , Pierre, 1994. "Fiscal Policy in a Growth Model with Both Altruistic and Non Altruistic Agents," CORE Discussion Papers 1994049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
    7. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    8. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, March.
    9. Jones, Larry E. & Manuelli, Rodolfo E., 1992. "Finite lifetimes and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 171-197, December.
    10. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    11. Lambrecht, S. & Michel, P. & Thibault, E., 2000. "Intertemporal Equilibrium with Myopic Altruism," G.R.E.Q.A.M. 00a24, Universite Aix-Marseille III.
    12. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    13. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    14. Michel, Philippe & Pestieau, Pierre, 1999. " Fiscal Policy When Individuals Differ With Regard to Altruism and Labor Supply," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 187-203.
    15. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585, April.
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    Citations

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    Cited by:

    1. Seghir, Abdelkrim & Salem, Sherif, 2010. "In nitely-lived agents via two-sided altruism," MPRA Paper 31379, University Library of Munich, Germany.
    2. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    3. repec:zbw:rwirep:0113 is not listed on IDEAS
    4. Borissov, Kirill, 2016. "The Rich And The Poor In A Simple Model Of Growth And Distribution," Macroeconomic Dynamics, Cambridge University Press, vol. 20(07), pages 1934-1952, October.
    5. Bréchet, Thierry & Lambrecht, Stéphane, 2011. "Renewable resource and capital with a joy-of-giving resource bequest motive," Resource and Energy Economics, Elsevier, vol. 33(4), pages 981-994.
    6. repec:spr:joevec:v:27:y:2017:i:5:d:10.1007_s00191-017-0519-3 is not listed on IDEAS
    7. Thierry Brechet & Stephane Lambrecht, 2009. "Family Altruism with Renewable Resource and Population Growth," Mathematical Population Studies, Taylor & Francis Journals, pages 60-78.
    8. Gary-Bobo, Robert J. & Nur, Jamil, 2015. "Housing, Capital Taxation and Bequests in a Simple OLG Model," CEPR Discussion Papers 10774, C.E.P.R. Discussion Papers.
    9. Kunze, Lars, 2012. "Funded social security and economic growth," Economics Letters, Elsevier, vol. 115(2), pages 180-183.
    10. Lars Kunze, 2009. "Capital Taxation, Long-run Growth, and Bequests," Ruhr Economic Papers 0113, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    11. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.
    12. Lars Kunze, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 0318, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Kunze, Lars, 2010. "Capital taxation, long-run growth, and bequests," Journal of Macroeconomics, Elsevier, pages 1067-1082.
    14. repec:zbw:rwirep:0318 is not listed on IDEAS
    15. Schwarz, Mordechai E. & Sheshinski, Eytan, 2007. "Quasi-hyperbolic discounting and social security systems," European Economic Review, Elsevier, vol. 51(5), pages 1247-1262, July.
    16. Stéphane Lambrecht, 2005. "Altruisme familial et dette publique," Revue Française d'Économie, Programme National Persée, vol. 19(3), pages 159-188.
    17. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
    18. Kunze, Lars, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 318, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    altruism; fiscal policy; equilibrium;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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