A Bequest-Constrained Economy: Welfare Analysis / Marc Nerlove, Assaf Razin, Efraim Sadka.

Format:

Book

Author/Creator:

Nerlove, Marc.

Contributor:

National Bureau of Economic Research.

Razin, Assaf.

Sadka, Efraim.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2779.

NBER working paper series no. w2779

Language:

English

Subjects (All):

Welfare economics.

Welfare economics Mathematical models.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

A Bequest-Constrained Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Cambridge, Mass. : National Bureau of Economic Research, 1988.

Summary:

Bequest constraints have played a major role in discussions of debt neutrality but their welfare implications were not sufficiently dealt with in the literature. In this paper we focus on the welfare implications of bequest constraints. We found that when institutional constraints to the transfer of resources from children to their parents exists the welfare of the parents' generation may be improved by an old age security scheme. Such a scheme is justified not by income redistribution consideration, as is typically the case, but rather on pure efficiency grounds. Due to its intergenerational transfer role the social security scheme is Pareto-improving with altruistic parents if, in addition, the real income effect which tends to raise children consumption is relatively strong.

Notes:

Print version record

December 1988.