Optimal Policy in OG Models

Christian Ghiglino, Mich Tvede

Research output: Contribution to journalArticlepeer-review


In the present paper general stationary overlapping generations economies with many commodities in every period and many different consumers in every generation are considered. A government maximizes a utilitarian social welfare function, which is the sum of weighted averages of utilities for generations, through fiscal policy, i.e., monetary transfers and taxes. Situations both with and without time discounting are considered. It is shown that if the discount factor is sufficiently close to one then the optimal policy stabilizes the economy, i.e. the equilibrium path has the turnpike property. Moreover the fiscal policy is shown to be time-consistent. Journal of Economic Literature Classification Numbers: D51, D91, E32, E52, H20.

Original languageEnglish (US)
Pages (from-to)62-83
Number of pages22
JournalJournal of Economic Theory
Issue number1
StatePublished - Jan 2000

ASJC Scopus subject areas

  • Economics and Econometrics


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