Abstract The present paper explores the fiscal policy implications of intergenerational habit formation in a Blanchard overlapping generations small open economy model. Three main conclusions emerge. (1) When individuals are finitely lived and have habits which they pass on to their descendants,...

Across countries, government expenditures tend to favor the elderly. This paper provides a political economy explanation for this phenomenon. I consider the classic problem of dividing a fixed payoff in an overlapping generations setting. Any share of the payoff can be given to any generation....

In an ongoing organization, such as a large law partnership firm, employees are motivated not only by current rewards but also by the prospect of promotion, and the opportunity to make the rules in the future. This leads to a recursive contract design problem in an overlapping generations...

Summary We compare projection methods with the standard value function grid algorithm in order to solve overlapping generations models. We apply the methods to a particular 60-period OLG model with elastic labor supply in order to study the effects of unfunded public pensions on aggregate...

Abstract Monetary policy is superneutral in an overlapping generations model. Previous authors have argued that superneutrality does not hold in such a setting. However, the standard results rely on the counter-factual premise of helicopter money and are overturned if money creation through open...

This paper considers a one-sector overlapping-generations model with production. We observe that under standard assumptions on preferences and technology, the perfect-foresight equilibrium violates positivity constraints for large sets of initial conditions. The consideration of the positivity...

Simon Grant and John Quiggin argue that taking the equity premium seriously—-the well-known fact that the average annual historical return of stocks is seven times that of government bonds and other debt-—has many implications, the most robust of which is that recessions are extremely costly...

Summary The theoretical consistency and practical applicability of traditional welfare economics has long been subject to controversy. More recently the challenge has been added from evolutionary approaches that the individual preferences on which the welfare calculus is based are themselves...

Abstract What did Coase teach about “The Social Cost Controversy” in the classroom? In 1972, an important year in the development of the economic approach to law, Coase taught “The Problem of Social Cost” and some important critiques of it, making his classroom a model of the market for...

Purpose The purpose of this paper is to ascertain whether weather variables can explain the stock return reaction on the Dow Jones Sustainability Europe Index by employing a number of macroeconomic indicators as control variables. Design/methodology/approach The authors incorporate the...