Operative Gift and Bequest Motives

Abstract

The Ricerdlon Equivalence Theorem, which is the proposition that changes in the timing of lump-sum taxes have no effect on consumption or capital accumulation, depends on the existence of operative altruistic motives for Intergenerational transfers. These transfers can ha bequests from parents to children or gifts from children to parents. In order for the Ricardlan Equivalence Theorem to hold, one of these transfer motives must he operative In the sense that the level of the transfer Is not determined by a corner solution resulting from a binding non-negativity constraint This paper derives conditions that determine whether the bequest motive will be operative, the gift motive will be operative, or neither motive will he operative In a model in which consumers are altruistic toward their parents end their children.

Property rights and efficiency in OLG models with endogenous fertility

“…This result is in contrast with the exogenous fertility dynastic OLG literature, starting with Barro (1974) and followed by Carmichael (1982), Burbidge (1983), Abel (1987) and others, where operative bequests or transfers are a sufficient condition for optimality or Pareto efficiency. The basic problem with a standard PAYG system is that the costs and benefits of producing children remain unaligned.…”

“…There was a heated debate about these issues at the end of the 1970's and early 1980's. See for example, Drazen (1978), Carmichael (1982), Buiter and Carmichael (1984), Burbidge (1984), Abel (1987) and Laitner (1988). Moreover, Cigno and Werding (2007) (p.121 and p.125) attribute inefficiencies pointed out in Conde-Ruiz, Giménez, and Pérez-Nievas (2010) and Wigniolle (2007, 2009) There are several reasons why assigning parents full property rights in altruistic models while assigning children full rights in non-altruistic models is so prevalent in the literature.…”

The Social Discount Rate

“…It states that if the planner has a certain quasihyperbolic discount rate, then the planner is time consistent. In an infinite horizon, this approach is robust in to Koopmans' critique if [8,1). It still leaves undetermined.…”

Some Mathematical Properties of the Dynamically Inconsistent Bellman Equation: A Note on the Two-Sided Altruism Dynamics

“…As references, two-sided altruism dynamics are treated, for example, in Abel (1987), Kimball (1987), Hori and Kanaya (1989), Altig and Davis (1993), Hori (1997), Aoki (2011). Furthermore, the differentiability of value functions is discussed in Benveniste and Scheinkman (1979), Santos (1991), Araujo (1991), Montrucchio (1987).…”