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The dynamics of utility in the neoclassical OLG model

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  • Kuhle, Wolfgang

Abstract

This paper develops a method to study how life-cycle utility of a sequence of cohorts converges to its steady state level in the neoclassical 2-period overlapping generations model. This method allows to characterize utility changes associated with marginal variations in exogenous policy parameters along the entire transition path between two steady states. At the same time, it is not more complicated than a pure steady state analysis. Moreover, it can be applied to economies for which an explicit solution of the transition path is not available.

Suggested Citation

  • Kuhle, Wolfgang, 2014. "The dynamics of utility in the neoclassical OLG model," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 81-86.
    • Handle: RePEc:eee:mateco:v:52:y:2014:i:c:p:81-86
    DOI: 10.1016/j.jmateco.2014.04.001
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    Cited by:

    1. Krueger, Dirk & Ludwig, Alexander & Villalvazo, Sergio, 2021. "Optimal taxes on capital in the OLG model with uninsurable idiosyncratic income risk," Journal of Public Economics, Elsevier, vol. 201(C).
    2. Hu, Weizhen, 2019. "Policy effects on transitional welfare in an overlapping generations model: A pay-as-you-go pension reconsidered," Economic Modelling, Elsevier, vol. 81(C), pages 40-48.
    3. Hamada, Kojun & Yanagihara, Mitsuyoshi, 2016. "Intergenerational altruism and the transfer paradox in an overlapping generations model," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 161-167.
    4. Kuhle, Wolfgang, 2021. "Equilibrium with computationally constrained agents," Mathematical Social Sciences, Elsevier, vol. 109(C), pages 77-92.

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