Policies for sustainability: Lessons from an overlapping generations model

Michael C. Farmer, Alan Randall

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

Discounting is often considered inimical to sustainability. Reliance on the assumption that endowments regulate the transfer of assets to the future in standard growth models interprets the interest rate in the intergenerational context as a partial reflection of myopia. A more complete market model that allows agents from different generations to engage in long-term contracts with one another severs the movement of capital to the future from the endowment assumption. Adherence to the endowment assumption as a de facto market structure, not simply a modeling convenience, endorses sustainability policies that injure the future.

Original languageEnglish
Pages (from-to)608-622
Number of pages15
JournalLand Economics
Volume73
Issue number4
DOIs
StatePublished - Nov 1997

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