PATENTS AND GROWTH IN OLG ECONOMY WITH PHYSICAL CAPITAL

2019 ◽  
pp. 1-20
Author(s):  
Bharat Diwakar ◽  
Gilad Sorek ◽  
Michael Stern
Keyword(s):  
Overlapping Generations ◽  
Patent Protection ◽  
Physical Capital ◽  
Demographic Structure ◽  
Overlapping Generations Model ◽  
Patent Length ◽  
Machine Utilization ◽  
Positive Effect ◽  
Patent Breadth ◽  
New Machine

We study the implications of patents in an overlapping generations model with horizontal innovation of differentiated physical capital. We show that within this demographic structure of finitely lived agents, weakening patent protection generates two contradicting effects on innovation and growth. Weakening patent protection lowers the (average) price of patented machines, thereby increasing machine utilization, output, aggregate saving, and investment. However, a higher demand for machines shifts investment away from the R&D activity aimed at inventing new machine varieties toward the formation of physical capital. The growth-maximizing level of patent protection is incomplete. Shortening patent length is more effective than loosening patent breadth in spurring growth, due to an additional positive effect on growth, that is decreasing investment in old patents. Welfare can be improved by weakening patent protection beyond the growth-maximizing level.

scholarly journals ADULT LONGEVITY AND GROWTH TAKEOFF

2014 ◽  
Vol 20 (1) ◽  
pp. 165-188 ◽  
Author(s):  
Daishin Yasui
Keyword(s):  
Life Cycle ◽  
Life Expectancy ◽  
Early Retirement ◽  
Overlapping Generations ◽  
Working Life ◽  
Adult Longevity ◽  
Overlapping Generations Model ◽  
Fertility Decisions ◽  
Retirement Decisions ◽  
Positive Effect

This paper develops an overlapping-generations model in which agents make educational and fertility decisions under life-cycle considerations and retirement from work is distinguished from death. Gains in adult longevity induce agents to decrease fertility, invest in education, and achieve higher income in order to save more for retirement. Even if working life is shortened by early retirement, this mechanism works as long as adult longevity increases sufficiently. Our model can explain the positive effect of life expectancy on education without contradicting the fact that working life length has not substantially increased, because of retirement. We also provide new insights into the interaction between fertility and retirement decisions.

scholarly journals ENVIRONMENTAL POLICY, EDUCATION AND GROWTH: A REAPPRAISAL WHEN LIFETIME IS FINITE

2011 ◽  
Vol 16 (5) ◽  
pp. 661-685 ◽  
Author(s):  
Xavier Pautrel
Keyword(s):  
Human Capital ◽  
Environmental Policy ◽  
Capital Accumulation ◽  
Overlapping Generations ◽  
Monetary Economics ◽  
Physical Capital ◽  
Positive Influence ◽  
Overlapping Generations Model ◽  
Final Output ◽  
Source Of Pollution

When finite lifetime is introduced in a Lucas [Journal of Monetary Economics 22 (1988), 3–42] growth model where the source of pollution is physical capital, the environmental policy may enhance the growth rate of a market economy, whereas pollution does not influence educational activities, labor supply is not elastic, and human capital does not enter the utility function. The result arises from the generational turnover effect due to finite lifetime and it remains valid under conditions when the education sector uses final output as well as time to accumulate human capital. This article also demonstrates that ageing reduces the positive influence of environmental policy when growth is driven by human capital accumulation à la Lucas in the overlapping-generations model of Yaari [Review of Economic Studies 32 (1965), 137–150] and Blanchard [Journal of Political Economy 93 (1985), 223–247].

scholarly journals Optimal Fiscal Policy in Overlapping Generations Models

2017 ◽  
Vol 47 (1) ◽  
pp. 3-31 ◽  
Author(s):  
Carlos Garriga
Keyword(s):  
Income Tax ◽  
Overlapping Generations ◽  
Demographic Structure ◽  
Capital Income ◽  
Transition Path ◽  
Overlapping Generations Model ◽  
Us Economy ◽  
The Us ◽  
Optimal Fiscal Policy ◽  
Optimal Capital

In this article, we explore the proposition that the optimal capital income tax is zero using an overlapping generations model. We prove that for a large class of preferences, the optimal capital income tax along the transition path and in steady state is nonzero. For a version of the model calibrated to the US economy, we find that the model could justify the observed rates of capital income taxation for an empirically reasonable intertemporal utility function and a robust demographic structure.

scholarly journals INCOME INEQUALITY, MOBILITY, AND THE WELFARE STATE: A POLITICAL ECONOMY MODEL

2012 ◽  
Vol 17 (6) ◽  
pp. 1198-1226 ◽  
Author(s):  
Luca Bossi ◽  
Gulcin Gumus
Keyword(s):  
Income Inequality ◽  
Welfare State ◽  
Social Insurance ◽  
Overlapping Generations ◽  
Tax Rates ◽  
Overlapping Generations Model ◽  
Public Programs ◽  
Transfer Payments ◽  
Set Up ◽  
The Welfare State

In this paper, we set up a three-period stochastic overlapping-generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax rates that determine the allocation of government revenues among transfer payments and old-age pensions. We show that the coalitions formed, the resulting political equilibria, and the demand for redistribution crucially depend on the level of income inequality and mobility.

scholarly journals Endogenous Agency Problems and the Dynamics of Rents

2020 ◽  
Vol 87 (6) ◽  
pp. 2542-2567
Author(s):  
B Biais ◽  
A Landier
Keyword(s):  
Overlapping Generations ◽  
Agency Problems ◽  
Overlapping Generations Model ◽  
Complex Tasks ◽  
Complex Skills ◽  
Do So

Abstract While potentially more productive, more complex tasks generate larger agency rents. Agents therefore prefer to acquire complex skills, to earn large rents. In our overlapping generations model, their ability to do so is kept in check by competition with predecessors. Old agents, however, are imperfect substitutes for young ones, because the latter are easier to incentivize, thanks to longer horizons. This reduces competition between generations, enabling young managers to go for larger complexity than their predecessors. Consequently, equilibrium complexity and rents gradually increase beyond what is optimal for the principal and for society.

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