A Theory of Economic Growth
Dynamics and Policy in Overlapping Generations

This book provides an in-depth treatment of the overlapping generations model in economics incorporating production.

David de la Croix (Author), Philippe Michel (Author)

9780521806428, Cambridge University Press

Hardback, published 24 October 2002

400 pages, 85 b/w illus. 10 tables
23.6 x 15.8 x 3 cm, 0.744 kg

'… an excellent introduction to an essential tool in economics …' Journal of Economics

Provides an in-depth treatment of the overlapping generations model in economics incorporating production. Chapter 1 investigates competitive equilibria and corresponding dynamics: existence and uniqueness of equilibrium, global dynamics of capital (including poverty traps), and various extensions of the model. Chapter 2 analyzes the optimality of allocations in this framework, using both the value function and marginal approaches. Optimality with unbounded growth is also analyzed. Policy issues including the Second Welfare Theorem, pensions, government spending, and optimal taxation, are discussed in chapter 3. The notion of public debt is introduced in chapter 4 and the sustainability of policies with budget deficits/surpluses is examined. The last chapter presents extensions of the model including altruism, education/human capital, and habit formation. Methodological emphasis is put on using general preferences and technologies, on the global study of dynamic aspects of the model, and on furnishing adequate tools to analyze policies involving inter-generational transfers.

Introduction
Acknowledgements
Part I. Competitive Equilibria: 1. The model
2. Main assumptions
3. The behavior of the agents at period t
4. The temporary equilibrium
5. The inter-temporal equilibrium with perfect foresight
6. Capital dynamics at a rational inter-temporal equilibrium
7. Comparison of myopic and perfect foresight
8. Applications and extensions
9. Conclusion
Part II. Optimality: 10. Optimality of stationary paths
11. Optimality of the dynamics
12. The planning problem
13. Marginal analysis of optimal solutions
14. Unbounded optimal growth
15. Applications and extensions
16. Conclusion
Part III. Policy: 17. Lump-sum transfers and the second welfare theorem
18. Pensions
19. Public spending
20. Study of the second-best problem
21. Applications and extensions
22. Conclusion
Part IV. Debt: 23. Diamond's model with debt
24. The inter-temporal budget constraint of the government
25. Constant deficit policies
26. Constant debt policies
27. Applications and extensions
28. Conclusion
Part V. Further Issues: 29. Dynastic altruism
30. Human capital and education
31. Inter-generational externalities
32. Macro-economics and general equilibrium
Technical appendices
List of definitions
List of propositions
List of assumptions
Bibliography
Author index
Subject index.

Subject Areas: Political economy [KCP], Economics [KC], Political science & theory [JPA], Development studies [GTF]