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This book contains an analysis of overlapping generations' economies. Both traditional issues of microeconomics such as the existence of equilibrium and optimality of equilibrium allocations and new issues such as fluctuations, exchange rates and endogenous growth are studied.

In the present paper stationary pure-exchange overlapping generations economies with L goods per date and M consumers per generation are considered. It is shown that for an open and dense set of utility functions there exist endowment vectors such that N-cycles exist for N less than or equal to L+1 and L less than or equal to M. The approach to existence of endogenous fluctuations is basic in the sense that the prime ingredients are the implicit function theorem and linear algebra. Moreover it is sketched how the approach can be applied to show that for an open and dense set of utility functions there exist endowment vectors such that sunspot equilibria, where prices at every date only depends on the state at that date, exist.

Cover -- Contents -- List of Figures -- List of Tables -- Preface and Acknowledgements -- 1 Introduction -- 1 Overview -- 2 Review of basic concepts -- 2 The Model -- 1 Introduction -- 2 The basic model -- 3 Capital accumulation and efficiency -- 4 Endogenous labor supply -- 5 Bequests -- 6 The multi-period framework -- 7 Conclusion -- 3 Tax Policy -- 1 Introduction -- 2 The optimal tax rule -- 3 Tax reform and the timing of tax payments -- 4 Capital income taxation -- 5 Further topics -- 4 Simulation Studies -- 1 Introduction -- 2 The basic model and tax reform -- 3 The dynamic simulation model with endogenous labor supply -- 4 The separation of efficiency and redistribution -- 5 Human capital investment -- 6 Concluding remarks -- 5 Public Spending -- 1 Introduction -- 2 Fiscal spending financed by lump-sum taxation -- 3 Fiscal spending financed by non-lump-sum taxation -- 4 Optimal spending of public goods -- 5 Public investment -- 6 The Open Economy -- 1 Introduction -- 2 The two-country model -- 3 Negative international spillover effects of consumption taxation -- 4 Capital income taxation -- 5 Optimal tax and spending policy -- 7 Money -- 1 Introduction -- 2 Overlapping generations models with money -- 3 Money and inflationary taxes -- 4 Welfare implications of indexing capital income taxation -- 8 Land -- 1 Introduction -- 2 Land and lump-sum taxes -- 3 Money, land, and taxes -- 9 Government Debt -- 1 Introduction -- 2 Government debt and intergenerational transfer -- 3 Debt neutrality with altruistic bequests -- 4 The chain-letter problem -- 5 Future tax reforms in a debt-financed economy -- 10 Social Security -- 1 Introduction -- 2 Overlapping generations model when fertility changes -- 3 Multi-period overlapping generations model -- 4 Welfare effects of an unfunded system when labor supply is endogenous -- 5 Further study.

This paper examines the interplay between discounting and the distribution of welfare between generations in formulating climate change response strategies. The analysis shows that one can understand Nordhaus's (1994) standard representative agent model for climate policy analysis as a reduced form of an overlapping generations model that embodies more realistic demographic assumptions. In this setting, alternative Pareto efficient allocations may be supported as competitive equilibria given appropriate sets of income transfers between generations. Numerical simulations establish that increased intergenerational transfers entail reduced monetary discount rates and increased rates of greenhouse gas emissions abatement. Short‐run policy choices are highly sensitive to normative judgments concerning the relative weight attached to the welfare of future generations.