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Bequests and the Intergenerational Degree of Altruism*

Published online by Cambridge University Press:  17 August 2016

Emmanuel Thibault
Emmanuel Thibault*
Affiliation:
GREQAM - Université de la Méditerranée
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Summary

We consider an OLG model with production and altruistic agents initially developed by Barro (1974). Through a simple example, we show that, contrary to the intuition of Abel (1987) and Weil (1987), an increase in the degree of altruism can result in a decrease in the stationary level of bequests even if the Diamond model has a unique and stable steady state. To rule out this counterintuitive case, an assumption on the curvature of the production function is necessary.

Résumé

Résumé

Nous considérons un modèle à générations imbriquées avec altruisme à la Barro. A l’aide d’un exemple simple, nous montrons que, contrairement à l’intuition de Weil (1987) et Abel (1987), supposer que le modèle de Diamond (1965) possède un équilibre stationnaire unique et stable ne garantit pas qu’une hausse du degré d’altruisme entraine une augmentation des legs. C’est une hypothèse sur la concavité de la fonction de production qui est nécessaire pour éviter ce résultat contre-intuitif.

Keywords

OLG modelsBequest motiveDegree of altruismC62D91041C62D91041
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 67 , Issue 2 , 2001 , pp. 131 - 138
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2001 

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Footnotes

**

GREQAM - Université de la Mediterranée - 2, rue de la Charite -13002 Marseille - France (e-mail: [email protected])

*

I thank Stephane GAUTHIER, Philippe MICHEL, Alain VENDITTI, Jean-Pierre VIDAL, and one anonymous referee of this journal for their comments and suggestions. I remain responsible for any error.

References

Abel, A.B., (1987), “Operative gift and bequest motives”, American Economic Review, 77, pp. 1037–1047.Google Scholar
Barro, R., (1974), “Are government bonds net wealth?”, Journal of Political Economy, 82, pp. 1095–1117.Google Scholar
Diamond, P.A., (1965), “National debt in a neoclassical growth model”, American Economic Review, 55, pp. 1126–1150.Google Scholar
Galor, O. and Ryder, H.E., (1989), “Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital”, Journal of Economic Theory, 49, pp. 360–375.Google Scholar
Thibault, E., (2000), “Existence of equilibrium in an OLG model with production and altruistic preferences”, Economic Theory, 15, pp. 709–715.Google Scholar
Weil, P., (1987), “Love thy children. Reflections on the Barro debt neutrality theorem”, Journal of Monetary Economics, 19, pp. 377–391.Google Scholar