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Optimal Policy in OG Models

Ghiglino, Christian and Tvede, Mich Optimal Policy in OG Models. [UNSPECIFIED]

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In the present paper general stationary overlapping generations economies with many commodities in every period and many different consumers in every generation are considered. A government maximizes an utilitarian social welfare function, that is the sum of weighted averages of utilities for generations, through fiscal policy, i.e. monetary transfers and taxes. Both situations with and without time discounting are considered. It is shown that if the discount factor is sufficiently close to one then the optimal policy stabilizes the economy, i.e. the equilibrium path has the turnpike property. Moreover the fiscal policy is shown to be time-consistent.

Uncontrolled Keywords: D51, D91, E32, E52, H20, overlapping generations economies, economic policy, turnpike property, discounting
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2012 18:03
Last Modified: 17 Aug 2017 18:10

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