The Transfer Problem and Intergenerational Allocation in an Overlapping Generations Model

Kojun Hamada, Akihiko Kaneko, Mitsuyoshi Yanagihara

研究成果: Article査読

抄録

We investigate the transfer problem between two countries in the steady state in a one-sector overlapping generations model and explain how transfers should be shared between the young and old generations of the donor country and allocated across the generations of the recipient country. Except at the golden rule of capital accumulation, the ratios of the burden and distribution of transfers between the young and old generations affect welfare. We obtain the following results. First, the sharing of the transfer burden in the donor country depends on the relative size of two effects, namely, a negative direct effect and a positive indirect effect. If the former exceeds the latter, it is preferable for the donor country to allocate all of the transfer burden to the old generation and vice versa. Second, from the viewpoint of welfare maximization, it is preferable for the recipient country to distribute all of the transfers to the young generation. In contrast to the existing literature, these results suggest that the setting whereby the young generation of the donor country defrays all transfer costs may not be justifiable from the viewpoint of donor welfare maximization.

本文言語English
ページ(範囲)599-615
ページ数17
ジャーナルInternational Economic Journal
30
4
DOI
出版ステータスPublished - 2016 10 1

ASJC Scopus subject areas

  • 経済学、計量経済学および金融学(全般)

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