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Capital accumulation and fiscal policy in an OLG model with family altruism

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  • LAMBRECHT, Stéphane
  • MICHEL, Philippe
  • THIBAULT, Emmanuel

Abstract

The idea of family altruism is that parents care only about their children's income and not about the use of this income made by the children. First, we establish dynamical properties which place the OLG model with family altruism halfway between the model with pure life-cyclers (Diamond (1965)) and the one with dynastic altruism (Barro (1974)). Then, we show that this concept leads to interesting fiscal policy conclusions less clear-cut and more realistic than those obtained with the two previous standard OLG models: a pay as you go social security is neutral but not a public debt.

Suggested Citation

  • LAMBRECHT, Stéphane & MICHEL, Philippe & THIBAULT, Emmanuel, 2005. "Capital accumulation and fiscal policy in an OLG model with family altruism," LIDAM Discussion Papers CORE 2005027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2005027
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    More about this item

    Keywords

    altruism; fiscal policy; equilibrium;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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