Intergenerational transfers, lifetime welfare and resource preservation
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Date
2006-10
Publication Type
Working Paper
ETH Bibliography
yes
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Abstract
This paper analyzes overlapping-generations models where natural capital is owned by sel sh agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an inde nite sequence of generations: if the resource share in production is su¢ ciently high, the welfare gain induced by preservation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely sel sh reasons.
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published
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Volume
06/55
Pages / Article No.
Publisher
CER-ETH – Center of Economic Research at ETH Zurich
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Subject
Distortionary Taxation; Renewable Resources; Overlapping Generations; Intergenerational Transfers; Technological Change; Sustainability
Organisational unit
03635 - Bretschger, Lucas (emeritus) / Bretschger, Lucas (emeritus)
02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.
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Is previous version of: https://doi.org/10.3929/ethz-b-000006105