Intergenerational Transfers as a Link between Overlapping Generations and Ramsey Models

This paper develops a continuous-time model in which intergenerational transfers, di.erent from bequest, serve as a link between the overlapping generations (OLG) model and Ramsey-type model. We show that this theoretical framework covers a range of possible dynamics including the model of perpetual youth and Ramsey model as the two boundary cases. We also prove that, except for the Ramsey case, the new model retains qualitative features of an OLG model: competitive equilibrium can be ine1cient, Ricardian debt neutrality may be violated, and asset bubbles can exist.
JEL classi/cation: C61; D91; O41
Mathematics Subject Classi/cation (2000): 91B64, 93C10
KEYWORDS: Growth models; Overlapping generations; Intergenerational transfers; Asset bubbles; Ricardian neutrality.

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