On Overlapping Generations Models with Productive Capital

This book was born out of a five-years research at Sonderforschungsbe­ reich 303 by the Deutsche Forschungsgemeinschaft (DFG) at Rheinische Friedrich-Wilhelms-Universitiit Bonn and was approved as my doctoral thesis by the Rechts-und Staatswissenschaftliche Fakultiit in December 1994. It was my former colleague Wolfgang Peters who had drawn my atten­ tion to overlapping-generations models and to problems of intergenerational efficiency and distribution. The subtle connection between the latter two has been fascinating me from the very beginning: redistribution of the results of free trade can become necessary from the point of view of efficiency, although no externalities hamper the development of an economy. In spite of being a matured part of economics, neoclassical growth theory had left many questions unsolved, some of them even unrecognized by a large part of our profession. I took up the challenge to contribute to the investigation of some of these thorny problems. One of these issues is the often quoted idea of the inter generational con­ tract. Although intergenerational transfers can improve intertemporal effi­ ciency, the design of pension schemes to achieve an improvement of well-being of some generations without hurting that of any other, is not an easy task in an economy with flexible prices. Quite frequently, only interest rate and growth rate are taken into account when deciding on whether a generation wins or looses.

Contenu

1. Dynamic Efficiency in a Generalized Diamond-Type Overlapping Generations Model.- 1.1 A Short History of Dynamic Efficiency.- 1.2 Framework and Preliminaries.- 1.3 A General Characterization of Dynamic Efficiency.- 1.4 A Price Characterization of Dynamic Efficiency.- 1.5 Conclusion and Preview.- 2. Asset Bubbles, Pay-as-you-go Systems and Dynamic Efficiency.- 2.1 What are Bubbles?.- 2.2 Framework and Tirole's Results.- 2.3 Two Redistribution Paradoxes.- 2.4 Are Bubbles always Pareto-improving?.- 2.5 What can we learn from this Exercise?.- 3. Just Resource Sharing Among Generations: Equity, Efficiency and Optimal Population.- 3.1 The Problem of Intergenerational Distributive Justice.- 3.2 Framework.- 3.3 Preliminaries.- 3.4 Do Fair Allocations Exist?.- 3.5 Optimal Fertility and General Serendipity.- 3.6 Conclusion.- 4. Anticipation and the Time-Consistency of Fiscal Policy.- 4.1 The Problem of Time-Consistency.- 4.2 Framework and Problem.- 4.3 Subgame-and Markov-Perfect Equilibrium.- 4.4 Preliminaries.- 4.5 The GMT and our Problem.- 4.6 Properties of Best Responses.- 4.7 The Case of Additive Separability.- 4.8 The Levelling Operation.- 4.9 Existence of Stationary Markov-Perfect Equilibrium.- 4.10 Paretian Properties of Stationary Markov-Perfect Equilibrium.- 4.11 Conclusion.- References.