Heterogeneous dynasties and the political economy of public debt

Gregory De Walque, Louis Gevers

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    We consider a small open overlapping generation economy with descending altruism. We introduce heterogeneity within dynasties by assuming that each parent procreates a fixed proportion of selfish children at each generation. Altruistic parents can recognize the type of each child and take it into account when bequeathing. There is no Ricardian equivalence and an active public intergenerational transfer policy is attractive to altruistic dynasty members, although there may be no unanimity among them. We display reasonable conditions for indirect preferences to be single-peaked and we apply the median voter theorem. We describe political equilibrium paths and discuss their compatibility with the steady path of an underlying closed economy with autonomous labor productivity growth. Classification Numbers: D31, D64, D72, D91, H63
    langue originaleAnglais
    Pages (de - à)369-389
    Nombre de pages21
    journalScandinavian Journal of Economics
    Numéro de publication3
    Etat de la publicationPublié - 2001

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