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On the long-run fluctuations of inheritance in two-sector OLG models

Author

Listed:
  • Florian Pelgrin

    (EDHEC - EDHEC Business School - UCL - Université catholique de Lille)

  • Alain Venditti

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, EDHEC - EDHEC Business School - UCL - Université catholique de Lille)

Abstract

This paper provides a long-run cycle perspective to explain the behavior of the annual flow of inheritance. Based on the low- and medium frequency properties of long time bequests series in Sweden, France, UK, and Germany, we explore the extent to which a two-sector Barro-type OLG model is consistent with such empirical regularities. As long as agents are sufficiently impatient and preferences are non-separable, we show that endogenous fluctuations are likely to occur through two mechanisms, which can generate independently or together either period-2 cycles or Hopf bifurcations. The first mechanism relies on the elasticity of intertemporal substitution or equivalently the sign of the cross-derivative of the utility function whereas the second rests on sectoral technologies through the sign of the capital intensity difference across two sectors. Furthermore, building on the quasi-palindromic nature of the degree-4 characteristic equation, we derive some meaningful sufficient conditions associated to the occurrence of complex roots and a Hopf bifurcation in a two-sector OLG model.

Suggested Citation

  • Florian Pelgrin & Alain Venditti, 2022. "On the long-run fluctuations of inheritance in two-sector OLG models," Post-Print hal-03869121, HAL.
    • Handle: RePEc:hal:journl:hal-03869121
    DOI: 10.1016/j.jmateco.2022.102670
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-03869121
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    Cited by:

    1. Guerrazzi, Marco, 2025. "A two-sector model of optimal growth in which labour is employed only in the industry of consumption goods: A complete characterization of equilibrium paths," MPRA Paper 126101, University Library of Munich, Germany.
    2. Guerrazzi, Marco, 2024. "Wage bargaining and capital accumulation: A dynamic version of the monopoly union model," MPRA Paper 121433, University Library of Munich, Germany.
    3. Gheorghe Moza & Oana Brandibur & Ariana Găină, 2023. "Dynamics of a Four-Dimensional Economic Model," Mathematics, MDPI, vol. 11(4), pages 1-15, February.
    4. Augeraud-Veron, Emmanuelle & Boucekkine, Raouf & Gozzi, Fausto & Venditti, Alain & Zou, Benteng, 2024. "Fifty years of mathematical growth theory: Classical topics and new trends," Journal of Mathematical Economics, Elsevier, vol. 111(C).

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    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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