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Intergenerational Transfers, Lifetime Welfare and Resource Preservation

  • Simone Valente

    (ETH Zurich - Institute of Economic Research)

This paper studies the welfare properties of distortionary transfers in a life-cycle growth model where natural capital is private property. The main result is that, under credible pre-commitment, each newborn generation prefers positive taxes-subsidies to laissez-faire conditions when the resource share in production is sufficiently high. By increasing the degree of natural preservation, resource-saving policies raise welfare of all generations except that of the first resource owner, who suffers a deadweight loss due to taxation of the initial stock. If the first owner renounces part of his claims over initial endowments, all successive generations support resource-saving policies for purely selfish reasons.

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File URL: http://econwpa.repec.org/eps/pe/papers/0505/0505008.pdf
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Paper provided by EconWPA in its series Public Economics with number 0505008.

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Length: 23 pages
Date of creation: 19 May 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0505008
Note: Type of Document - pdf; pages: 23
Contact details of provider: Web page: http://econwpa.repec.org

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