Altruism and Determinacy of Equilibria in Overlapping Generations Models with Externalities

Abstract

This paper deals with an OLG model with production and a single commodity, in which agents are assumed altruistic and the aggregate production function contains external effects. I prove that, if the technology satisfies a minor assumption, which encompasses positive and negative externalities, some curvature conditions on the utility function ensure local determinacy of stationary and period 2 equilibria. I prove that non-separable, strictly concave preferences are a fundamental ingredient for the occurrence of indeterminate equilibria. Finally, considering the case of unbounded growth, I establish that for any utility and production functions a unique balanced growth path is globally determinate. JEL Classification Numbers: C62, E32.

Workable Pension Systems: Reforms in the Caribbean

“…More important, some welfare and pension systems are based on pay-as-you-go mechanisms where current benefits are paid out of current revenues (contributions) and the general exchequer, while others rely on funded mechanisms that pay benefits using proceeds from capital accumulation. • In terms of administration, some systems are centrally run by public sector entities and some are highly decentralized to other public or semipublic institutions, often operated as autonomous agencies under boards and management committees representing workers and employers (Flora and Heidenheimer 1983;Ferrera 1993Ferrera , 1998Esping Andersen 1996aClark, Craig, and Wilson 2003;Mitchell, Myers, and Young 2003;Venditti 2003).…”