Second-Best National Saving and Growth with Intergenerational Disagreement

F.M. Gonzalez, I. Lazkano, Sjak A. Smulders

Research output: Working paperOther research output

Abstract

We illustrate the contrast between two sources of intergenerational disagreement when generations are overlapping and governments aggregate preferences in a utilitarian manner. Social preferences tend to exhibit a present-bias because generations are imperfectly altruistic about future generations; but they tend to exhibit a future-bias because coexisting generations are imperfectly altruistic about currently older generations. When the future-bias dominates, society faces an intergenerational equity problem, in which case the present-day government tends to support institutions that enable commitments to lower growth at the expense of future generations. This is so even with perfect altruism about future generations.
Original languageEnglish
Place of PublicationWaterloo Ontario
PublisherUniversity of Waterloo
Number of pages34
Volume14-003
Publication statusPublished - Mar 2014

Publication series

NameWaterloo Economics Series
Volume14-003

Keywords

  • intergenerational disagreement
  • altruism
  • overlapping generations
  • growth
  • quasi-hyperbolic discounting
  • commitment

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