Finite lifetimes and growth

Larry E. Jones, Rodolfo E. Manuelli

Research output: Contribution to journalArticlepeer-review

84 Scopus citations

Abstract

In this paper we study the long run growth property of overlapping generations models. It is shown that in one sector models with convex technologies the asymptotic growth rate must be zero. This results because the young do not have sufficient income to purchase a large capital stock. Thus, a policy of income redistribution to the young can generate growth even if financed by income taxation. Additionaly, it is shown that two sector models and one sector models with nonconvex technologies are consistent with growth.

Original languageEnglish (US)
Pages (from-to)171-197
Number of pages27
JournalJournal of Economic Theory
Volume58
Issue number2
DOIs
StatePublished - Dec 1992
Externally publishedYes

Bibliographical note

Funding Information:
* This paper was originally presented at the conference on Investment Aspects of Growth, SUNY Buffalo, May 1990. The comments of the participants and our discussant Sergio Rebelo, as well as those of two anonymous referees, were very valuable. We thank Lars Hansen, Hugo Hopenhayen, and Nancy Stokey for useful discussion and the National Science Foundation and a Stanford Graduate School of Business Faculty Fellowschip Fund for financial support. Charles Goldman providid expert research assistance, and Leslie Reinborn pointed out some mistakes in an earlier version. Remaining errors are ours.

Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.

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