Trading Off Generations: Infinitely-Lived Agent Versus OLG

Schneider, Maik T.; Traeger, Christian; Winkler, Ralph (March 2010). Trading Off Generations: Infinitely-Lived Agent Versus OLG (Discussion Papers 10-07). Bern: Department of Economics

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The prevailing literature discusses intergenerational trade-offs predominantly in infinitely-lived agent models despite the finite lifetime of individuals. We discuss these trade-offs in a continuous time OLG framework and relate the results to the infinitely-lived agent setting. We identify three shortcomings of the latter: First, underlying normative assumptions about
social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies. Regarding the recent debate on climate change, we conclude that it is indispensable to explicitly consider the generations’ life cycles.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Winkler, Ralph

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

14 Oct 2020 15:39

Last Modified:

09 Mar 2021 03:42

JEL Classification:

D63, H23, Q54

BORIS DOI:

10.7892/boris.145728

URI:

https://boris.unibe.ch/id/eprint/145728

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