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Marion Davin, Karine Gente and Carine Nourry
''Social optimum in an OLG model with paternalistic altruism''
( 2012, Vol. 32 No.4 )
There is no consensus yet on the correct way to write the social utility function in the presence of paternalistic altruism. This note shows that the specification of the central planner objective is crucial for optimal capital accumulation and growth. When paternalistic altruism enters the social welfare function, we depart from the standard Modified Golden Rule. Capital intensity is no more determined by the equality between optimal returns on human and physical capital, and the optimal growth rate is higher when we consider altruism enters in the social welfare function. We calibrate the model for several countries and emphasize large differences on optimal growth rate, according to the specification of the social welfare function.
Keywords: Social welfare function, Paternalistic altruism, Optimal balanced path
JEL: B4 - Economic Methodology: General
A1 - General Economics: General
Manuscript Received : Apr 13 2012 Manuscript Accepted : Dec 20 2012

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