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Title:Trading off generations: Infinitely lived agent versus OLG PDF Logo
Authors:Schneider, Maik T.
Traeger, Christian
Winkler, Ralph
Issue Date:2012
Series/Report no.:CESifo working paper: Public Choice 3743
Abstract:The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: First, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.
Subjects:climate change
discounting
infinitely lived agents
intergenerational equity
overlapping generations
time preference
JEL:D63
H23
Q54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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