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The Relationship between the Modified Golden Rule in the Ramsey Model and the Equilibrium Solutions in the Overlapping Generations Model

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  • Yasuoka, Masaya

Abstract

This paper demonstrates that the modified golden-rule level of capital stock derived in the Ramsey model can also be obtained within the overlapping generations model. While the standard overlapping generations model typically addresses a two-period optimization problem and involves dynamic inefficiency, the introduction of a bequest motive allows the equilibrium to coincide with that of the Ramsey model under certain conditions. This indicates that, despite differing motivations for leaving wealth, the solutions of the two models can converge.

Suggested Citation

  • Yasuoka, Masaya, 2025. "The Relationship between the Modified Golden Rule in the Ramsey Model and the Equilibrium Solutions in the Overlapping Generations Model," MPRA Paper 126065, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:126065
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    References listed on IDEAS

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    1. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
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    • E0 - Macroeconomics and Monetary Economics - - General

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