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Optimal growth path in an OLG economy without time-preference assumptions (full text)


  • Mohamed Mabrouk

    (Ecole Supérieure de Statistique et d'Analyse de l'Information de Tunis)


The aim is to characterize optimal growth paths in an OLG economy where capital accumulation is achieved through bequests, without using the assumption of time preference theory on a social level, because such an assumption, that leads to use a discounted infinite horizon sum, introduce necessarily inequality between the different generations of the society. I investigated two optimality concepts: Pareto-optimality and consensual optimality. I considered the case without technical change. I found that all steady-state optimal growth paths converge necessarily to a level of capital where the marginal gain from a decrease of bequest is equal to the marginal loss from a similar decrease of heritage. With the use of an intergenerational altruistic utility, I showed that spontaneous equilibrium cannot be an optimal growth path unless generations feel (asymptotically) for their heirs as they feel for themselves.

Suggested Citation

  • Mohamed Mabrouk, 2005. "Optimal growth path in an OLG economy without time-preference assumptions (full text)," GE, Growth, Math methods 0510006, EconWPA.
  • Handle: RePEc:wpa:wuwpge:0510006
    Note: Type of Document - pdf; pages: 46. This paper gives the detailed proofs of 'Optimal growth path in an OLG economy without time- preference assumptions: main results'

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    References listed on IDEAS

    1. Fagerberg, Jan, 2000. "Technological progress, structural change and productivity growth: a comparative study," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 393-411, December.
    2. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    3. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273 Elsevier.
    4. K. Ali Akkemik, 2005. "Structural Change and Its Impact on Productivity in Japan, Korea, and Singapore (1970-2000)," GE, Growth, Math methods 0504002, EconWPA.
    5. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
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    Cited by:

    1. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth II: Pareto optimality and some economic interpretations," GE, Growth, Math methods 0511007, EconWPA.
    2. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth I: Consensual optimality," GE, Growth, Math methods 0510013, EconWPA.
    3. Mabrouk, Mohamed, 2006. "Allais-anonymity as an alternative to the discounted-sum criterion in the calculus of optimal growth I: Consensual optimality," MPRA Paper 10512, University Library of Munich, Germany.

    More about this item


    optimal growth; time-preference; egalitarianism; Pareto- optimality; golden-rule; OLG economy;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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