Public goods and the transfer paradox in an overlapping generations model

Abstract

This paper, incorporating public goods into a two-country Diamond overlapping generations model, shows the existence of a transfer paradox. Governments supply public goods, in addition to imposing a tax on workers and issuing government bonds. In the short-run, only a weak paradox can occur, but in the long-run, both weak and strong paradoxes can occur. These paradoxical results depend on government policy concerning the level of supply of public goods, and on the difference in the levels of externality of public goods between the donor country and the recipient country. The transitional economy will also be discussed.Fiscal policy, foreign aid, public goods, macroeconomic analyses of economic development,

Infectious disease and preventive behavior in an overlapping generations model

“…(In this regard, see Haaparanta (1989) and Yanagihara (1998).) Although the result obtained in the present analysis seems to resemble the transfer paradox, the mechanism by which this paradoxical result occurs is quite different.…”

The transfer paradox in a pay-as-you-go pension system

“…The other terms represent the indirect effect, which correspond to the effect of the transfer on the level of welfare due to a change in the return from savings through a change in the interest rate. In (14) this indirect effect is decomposed into three components. The first component,…”

“…2 Following Galor and Polemarchakis (1987), Haaparanta (1989) demonstrates the occurrence of a transfer paradox even if the transfer is of one-shot form, when the governments issue their bonds. Yanagihara (1998) incorporates public goods affecting productivity in the private production sector and considers transfer in the form of a lump sum, debt relief, and public goods. Yanagihara (2006) provides a graphical picture of the transfer paradox set out in Galor and Polemarchakis (1987).…”

Donor Altruism and the Transfer Paradox in an Overlapping Generations Model

“…The savings function is defined by . As in Haaparanta () and Yanagihara (, ), we assume that the savings function is increasing in both the wage and interest rate, that is, and .…”

“…. The savings function is defined by Haaparanta (1989) and Yanagihara (1998Yanagihara ( , 2006, we assume that the savings function is increasing in both the wage and interest rate, that is, s s w…”