Surplus analysis for overlapping generations

✍ Scribed by Joaquim Silvestre

• Book ID: 104293670
• Publisher: Elsevier Science
• Year: 2000
• Tongue: English
• Weight: 219 KB
• Volume: 24
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(99)00002-0

✦ Synopsis

I extend surplus analysis to overlapping generations. In the atemporal quasilinear model we have the &global equivalence principle': e$ciency is equivalent to surplus maximization, provided that the numeraire is unbounded from below. If it is not, then only a &local equivalence principle' obtains, requiring large holdings of numeraire. My extension covers "nite and in"nite time. The "nite model has one numeraire per period, but it otherwise parallels the atemporal model. The in"nite case is more subtle: the global equivalence principle is lost, but the local principle is recovered if numeraires are bounded and if consumers discount the old-age numeraire.