Gifts, Bequests, and Growth
Posted: 4 Oct 2000
A familiar result in the theory of private intergenerational transfers is that competitive equilibria with gifts from children to their parents are dynamically inefficient whereas they are dynamically efficient with bequests from parents to their children. This note demonstrates that if growth is endogenous, both gift and bequest economies are dynamically efficient, but gift economies grow more rapidly.
JEL Classification: E25
Suggested Citation: Suggested Citation