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