The Relationship between the Modified Golden Rule in the Ramsey Model and the Equilibrium Solutions in the Overlapping Generations Model

Yasuoka, Masaya (2025): The Relationship between the Modified Golden Rule in the Ramsey Model and the Equilibrium Solutions in the Overlapping Generations Model.

Abstract

This paper demonstrates that the modified golden-rule level of capital stock derived in the Ramsey model can also be obtained within the overlapping generations model. While the standard overlapping generations model typically addresses a two-period optimization problem and involves dynamic inefficiency, the introduction of a bequest motive allows the equilibrium to coincide with that of the Ramsey model under certain conditions. This indicates that, despite differing motivations for leaving wealth, the solutions of the two models can converge.

• Item Type: MPRA Paper
• Language: English
• Keywords: Overlapping Generations Model, Dynamics of Capital Stock, Ramsey Model
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General

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