Journal article
Deviant generations, Ricardian equivalence, and growth cycles
Economic theory, v 52(1), pp 367-396
01 Jan 2013
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Two equilibrium possibilities are known to obtain in a standard overlapping-generations model with dynastic preferences: either the altruistic bequest motive is operative for every generation (in which case, Ricardian equivalence obtains) or it is not, for any generation. Dynamic equilibria, where the bequest motive is occasionally operative, cannot emerge. This paper studies bequest-giving behavior and out-of-steady-state bequest and growth dynamics in a Ak model with intra- and inter-generational consumption externalities. These externalities, by their very presence, do not destroy Ricardian equivalence. They may, however, give rise to deviant generations-generations that do not leave a bequest having received an inheritance, and vice versa-and that seals the fate for Ricardian equivalence. Consumption externalities may also generate interesting indeterminacies and endogenous growth cycles that did not exist otherwise.
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Details
- Title
- Deviant generations, Ricardian equivalence, and growth cycles
- Creators
- Richard C. Barnett - Drexel UniversityJoydeep Bhattacharya - Iowa State UniversityHelle Bunzel - Iowa State University
- Publication Details
- Economic theory, v 52(1), pp 367-396
- Publisher
- Springer Nature
- Number of pages
- 30
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000315573100014
- Scopus ID
- 2-s2.0-84874575538
- Other Identifier
- 991019167936604721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Economics