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Fiscal policy in an overlapping generations model with bequest-as-consumption

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  • MICHEL, Philippe
  • PESTIEAU, Pierre

Abstract

This paper analyzes an overlapping generation (OLG) growth model wherein saving finances second period consumption and bequest‐as‐consumption. First, it looks at the market equilibrium and at the optimal solution; then it turns to the issue of decentralizing the optimal solution with various taxes and transfers. Depending on the available instruments, either a first‐best or a second‐best optimum can be achieved. Throughout the paper, the results are contrasted with those obtained in the standard OLG model without intergenerational transfers.
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  • MICHEL, Philippe & PESTIEAU, Pierre, 2004. "Fiscal policy in an overlapping generations model with bequest-as-consumption," LIDAM Reprints CORE 1988, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1988
    DOI: 10.1111/j.1467-9779.2004.00171.x
    Note: In : Journal of Public Economic Theory, 6(3), 397-407, 2004
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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
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    4. Philippe Michel & Pierre Pestieau, 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, April.
    5. MICHEL, Ph. & PESTIEAU, P., 1998. "Fiscal policy in a growth model with both altruistic and nonaltruistic agents," LIDAM Reprints CORE 1301, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
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    9. MICHEL, Philippe & PESTIEAU, Pierre, 2001. "Fiscal policy in a growth model with bequest-as-consumption," LIDAM Discussion Papers CORE 2001009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Ryota Nakano, 2021. "The effect of inter vivos gifts taxation on wealth inequality and economic growth," Discussion Papers in Economics and Business 21-04, Osaka University, Graduate School of Economics.
    2. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 15, pages 1055-1106, Elsevier.
    3. Jinlu Li & Shuanglin Lin, 2021. "Existence of equilibrium in an overlapping‐generations model with government debt," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 691-709, August.
    4. Garriga, Carlos & Sánchez-Losada, Fernando, 2009. "Indirect taxation and the welfare effects of altruism on the optimal fiscal policy," Economic Modelling, Elsevier, vol. 26(6), pages 1365-1374, November.
    5. Brunner Johann K. & Pech Susanne, 2012. "Optimal Taxation of Wealth Transfers When Bequests are Motivated by Joy of Giving," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-22, March.
    6. Helmuth Cremer & Pierre Pestieau, 2011. "The Tax Treatment of Intergenerational Wealth Transfers ," CESifo Economic Studies, CESifo Group, vol. 57(2), pages 365-401, June.
    7. 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.
    8. Volker Grossmann & Panu Poutvaara, 2009. "Pareto-improving bequest taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 647-669, October.
    9. Roberto Brunetti & Carl Gaigné & Fabien Moizeau, 2023. "Land, Wealth, and Taxation," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2023-06, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    10. Helmuth Cremer & ) & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Public Economics 0311003, University Library of Munich, Germany.
    11. Kazi Iqbal & Stephen J. Turnovsky, 2008. "Intergenerational Allocation of Government Expenditures: Externalities and Optimal Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(1), pages 27-53, February.
    12. Carlos Garriga & Fernando Sánchez-Losada, 2009. "Estate taxation with warm-glow altruism," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 8(2), pages 99-118, August.
    13. Stefano STAFFOLANI & Enzo VALENTINI, 2006. "Bequest Taxation, allocation of talents, education and efficiency," Working Papers 248, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    14. Staffolani, Stefano & Valentini, Enzo, 2007. "Bequest taxation and efficient allocation of talents," Economic Modelling, Elsevier, vol. 24(4), pages 648-672, July.

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