The traditional argument against the relevance of sector-specific shocks for the aggregate phenomenon of business cycles invokes the law of large numbers: positive shocks in some sectors are offset by negative shocks in other sectors. This paper hypothesizes that cancellation of sector-specific...

We develop a model of fertility choice by utility maximizing households, based on an explicit notion of intergenerational external effects. In contrast to previous economic literature, we assume that the external effects run from children to parents. This gives rise to a fundamentally different...

We model PAYG social security systems as the outcome of majority voting within a OLG model with production. When voting, individuals make two choices: pay the elderly their pensions or default. which amount to promise themselves next period. Under general circumstances, there exist equilibria...