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Intergenerational Transfers, Lifetime Welfare and Resource Preservation

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  • Valente, Simone

Abstract

This paper analyzes overlapping-generations models where natural capital is owned by selfish agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations: if the resource share in production is sufficiently high, the welfare gain induced by preservation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely selfish reasons.

Suggested Citation

  • Valente, Simone, 2006. "Intergenerational Transfers, Lifetime Welfare and Resource Preservation," MPRA Paper 1042, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1042
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    Cited by:

    1. Roberto Iacono, 2014. "On the Interplay Between Intergenerational Transfers and Natural Resources," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 12(2), pages 167-199.
    2. Valente, Simone, 2011. "Endogenous Growth, Backstop Technology Adoption, And Optimal Jumps," Macroeconomic Dynamics, Cambridge University Press, vol. 15(3), pages 293-325, June.
    3. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," CER-ETH Economics working paper series 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    4. Kostas Bithas, 2020. "A bioeconomic approach to sustainable development: Incorporating ecological thresholds within intergenerational efficiency," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(4), pages 772-780, July.
    5. Farmer Karl & Bednar-Friedl Birgit, 2017. "Existence and Efficiency of Stationary States in a Renewable Resource Based OLG Model with Different Harvest Costs," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(3), pages 3-32, December.
    6. Valente, Simone, 2011. "Habit formation and resource dependence in dynastic economies," Mathematical Social Sciences, Elsevier, vol. 61(3), pages 131-145, May.
    7. Stan Metcalfe, 2014. "George Shackle and The Schumpeterian Legacy," Graz Economics Papers 2014-08, University of Graz, Department of Economics.
    8. Valente, Simone, 2011. "Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion," Resource and Energy Economics, Elsevier, vol. 33(4), pages 995-1014.

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    More about this item

    Keywords

    Distortionary Taxation; Intergenerational Transfers; Overlapping Generations; Renewable Resources; Sustainability; Technological Change;
    All these keywords.

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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