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Altruism, uncertain lifetime and the distribution of wealth

  • Luisa Fuster

This paper studies the dynamics of the distribution of wealth in a general equilibrium framework. It considers an overlapping generations model with production and altruistic preferences in which individuals face an uncertain lifetime and annuity markets do not exist. This paper focuses on the role that accidental bequests, voluntary bequests, and non--negativity constraints on bequests play in the dynamics of the distribution of wealth. It is proved that the equilibrium interest rate is lower than the one that satisfies the modified golden rule. In this economy, a social security system not only plays an insurance role, but also prevents capital overaccumulation. In fact, this paper shows that a pay--as--you--go social security system decentralizes the social planner solution as a competitive equilibrium.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/150.pdf
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 150.

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Date of creation: Dec 1995
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Handle: RePEc:upf:upfgen:150
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Xavier Sala-i-Martin, 1995. "A positive theory of social security," Economics Working Papers 108, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Daniel Serra & Charles Revelle, 1992. "The PQ-Median problem: Location and districting of hierarchical facilities. Part I," Economics Working Papers 12, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Thierry Foucault, 1994. "Price formation and order placement strategies in a dynamic order driven market," Economics Working Papers 99, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Antoni Bosch-Domenech & Shyam Sunder, 2000. "Tracking the Invisible Hand: Convergence of Double Auctions to Competitive Equilibrium," Computational Economics, Society for Computational Economics, vol. 16(3), pages 257-284, December.
  5. Ramon Marimon & Fabrizio Zilibotti, 1994. "'Actual' versus 'virtual' employment in Europe: Why is there less employment in Spain?," Economics Working Papers 100, Department of Economics and Business, Universitat Pompeu Fabra.
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