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Über dieses Buch

This book was born out of a five-years research at Sonderforschungsbe­ reich 303 by the Deutsche Forschungsgemeinschaft (DFG) at Rheinische Friedrich-Wilhelms-Universitiit Bonn and was approved as my doctoral thesis by the Rechts-und Staatswissenschaftliche Fakultiit in December 1994. It was my former colleague Wolfgang Peters who had drawn my atten­ tion to overlapping-generations models and to problems of intergenerational efficiency and distribution. The subtle connection between the latter two has been fascinating me from the very beginning: redistribution of the results of free trade can become necessary from the point of view of efficiency, although no externalities hamper the development of an economy. In spite of being a matured part of economics, neoclassical growth theory had left many questions unsolved, some of them even unrecognized by a large part of our profession. I took up the challenge to contribute to the investigation of some of these thorny problems. One of these issues is the often quoted idea of the inter generational con­ tract. Although intergenerational transfers can improve intertemporal effi­ ciency, the design of pension schemes to achieve an improvement of well-being of some generations without hurting that of any other, is not an easy task in an economy with flexible prices. Quite frequently, only interest rate and growth rate are taken into account when deciding on whether a generation wins or looses.

Inhaltsverzeichnis

Frontmatter

Introduction

Abstract
This work will be concerned with several yet unsolved, maybe even partly unnoticed, problems in the framework of the Diamond (1965) type overlapping generations model with productive capital. These are problems of intertemporal (dynamic) efficiency, distributive justice and optimal population, and the problem of time-consistency of fiscal policy.
Günther Lang

1. Dynamic Efficiency in a Generalized Diamond-Type Overlapping Generations Model

Abstract
Considerations on dynamic efficiency began with the seminal papers by Maurice Allais (1947) and Paul Samuelson (1958) which may well be among the most stimulating contributions to economics. They stress that the competitive equilibrium allocation is not necessarily Pareto-optimal, although the usual kinds of distortions are absent. In this sense, their results rocked the foundations of modern welfare economics, which are deeply connected with modern equilibrium theory: for the traditional general equilibrium model, developed by Arrow and Debreu (1954) and some others, it was shown by Koopmans (1957) that a Walrasian equilibrium possesses the property of Pareto-optimality — and just this property was now questioned by Allais’ and Samuelson’s findings.
Günther Lang

2. Asset Bubbles, Pay-as-you-go Systems and Dynamic Efficiency

Abstract
From an economic point of view, asset bubbles can be defined as things whose actual prices differ from their market fundamentals, i.e. the present discounted values of their dividends. A pure bubble yields no return, i.e. it is useless in production, and no individual derives utility from just holding it. Tirole (1985) in his article on ‘Asset Bubbles and Overlapping Generations’ gives several examples of things which can serve as bubbles, for instance gold, stocks, land, money, or a beautiful painting. Although some of these things are intrinsically worthless and have no positive market fundamentals, they have a positive price. And others which pay some dividend, for example if people are willing to spend money to view a beautiful painting, have a market price which exceeds the discounted value of their dividends.
Günther Lang

3. Just Resource Sharing Among Generations: Equity, Efficiency and Optimal Population

Abstract
The problem of resource sharing is one of the most eminent problems of today’s economic policy. Many instruments of (re-)distribution are available in an economy for instance taxes, government debt and social security systems, and many other governmental tools which are not named as such can be identified as belonging to one or another of these groups. Nearly all of these instruments are not only used to extract a price for a certain service provided by state institutions, but they are also intended to redistribute wealth, directly or indirectly, between individuals. Therefore, the question arises as to how a government should use these tools to arrive at a just distribution of resources between individuals within and across generations. It is just this latter problem of intergenerational just resource sharing which will be the concern of this chapter.
Günther Lang

4. Anticipation and the Time-Consistency of Fiscal Policy

Abstract
This chapter is devoted to the analysis of fiscal policy with welfare functions which are usually not used by utilitarists for the planning of intergenerational allocations. Typical welfare functions which can be found in the literature stem from the pioneering work by Bentham and Sidgewick1, being formalized by Ramsey (1928) for the framework of a growth model in his famous article ‘A Mathematical Theory of Saving.’
Günther Lang

Backmatter

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