Family altruism with a renewable resource and population growth
We develop an overlapping-generation model `a la Diamond with a non-constant population growth in which households privately own a natural renewable resource and have a family- altruism resource bequest motive. The natural resource can be either extracted and sold to the producing ﬁrms as a production factor, or bequeathed to the offspring to increase his adult disposable income. With a numerical application, we analyze how family altruism interplays with population growth to shape the dynamics of the whole economy. We also highlight the role of altruism in the case of a temporary negative demographic shock. The simulations we present show that a fall in the size of families increases the family natural resource stock but reduces resource extraction on the transition, through a reinforcement of family altruistic links. Hence, family altruism plays a key role in the recovery of the economy after the shock.
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CORE Discussion Papers RP
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