Imperfect Competition in an Overlapping Generations Model: A Case for Fiscal Policy

1995 ◽  
pp. 531 ◽  
Author(s):  
d'Aspremont ◽  
Dos Santos Ferreira ◽  
Gerard-Varet
Keyword(s):  
Fiscal Policy ◽  
Imperfect Competition ◽  
Overlapping Generations ◽  
Overlapping Generations Model

scholarly journals INCOME DISTRIBUTION BY AGE GROUP AND PRODUCTIVE BUBBLES

2020 ◽  
pp. 1-31
Author(s):  
Xavier Raurich ◽  
Thomas Seegmuller
Keyword(s):  
Fiscal Policy ◽  
Overlapping Generations ◽  
Consumption Smoothing ◽  
Age Group ◽  
Overlapping Generations Model ◽  
Aggregate Production ◽  
Speculative Bubbles ◽  
Intertemporal Consumption ◽  
Distribution Of Income

The aim of this paper is to study the role of the distribution of income by age group on the existence of speculative bubbles. A crucial question is whether this distribution may promote a bubble associated to a larger level of capital, that is a productive bubble. We address these issues in an overlapping generations model where agents live three periods and productive investment done in the first period of life is an illiquid investment whose return occurs in the following two periods. A bubble is a liquid speculative investment that facilitates intertemporal consumption smoothing. We show that the distribution of income by age group determines both the existence and the effect of bubbles on aggregate production. We also show that fiscal policy, by changing the distribution of income, may facilitate or prevent the existence of bubbles and may also modify the effect that bubbles have on aggregate production.

scholarly journals INCOME INEQUALITY, MOBILITY, AND THE WELFARE STATE: A POLITICAL ECONOMY MODEL

2012 ◽  
Vol 17 (6) ◽  
pp. 1198-1226 ◽  
Author(s):  
Luca Bossi ◽  
Gulcin Gumus
Keyword(s):  
Income Inequality ◽  
Welfare State ◽  
Social Insurance ◽  
Overlapping Generations ◽  
Tax Rates ◽  
Overlapping Generations Model ◽  
Public Programs ◽  
Transfer Payments ◽  
Set Up ◽  
The Welfare State

In this paper, we set up a three-period stochastic overlapping-generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax rates that determine the allocation of government revenues among transfer payments and old-age pensions. We show that the coalitions formed, the resulting political equilibria, and the demand for redistribution crucially depend on the level of income inequality and mobility.

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