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Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth II: Pareto optimality and some economic interpretations

  • Mohamed Mabrouk

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

This paper studies the Pareto-optimality of the consensual optimum established in 'Intergenerational anonymity as an alternative to the discounted-sum criterion I: consensual optimality'. For that, a Pareto- optimality criterion is set up by the application of the generalized Karush, Kuhn and Tucker theorem and thanks to the decomposition of the space of subgeometric sequences of reason p. That makes it possible to find sufficient conditions so that a bequest-rule path is Pareto- optimal. Through an example, it is then shown that the golden rule must be checked to achieve anonymous optimality. The introduction of an additive altruism makes it possible to highlight the intergenerational- preference rate compatible with anonymous optimality. In this approach, it is not any more the optimality which depends on the intergenerational-preference rate, but the optimal intergenerational- preference rate which rises from anonymous optimality.

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Paper provided by EconWPA in its series GE, Growth, Math methods with number 0511007.

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Length: 36 pages
Date of creation: 08 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpge:0511007
Note: Type of Document - pdf; pages: 36
Contact details of provider: Web page: http://econwpa.repec.org

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