On the Golden Rule of capital accumulation under endogenous longevity

Pre-print, Working paper: This note derives the Golden Rule of capital accumulation in a Chakraborty-type economy, i.e. a two-period OLG economy where longevity is endogenous. It is shown that the capital per worker maximizing steady-state consumption per head is inferior to the Golden Rule capital level prevailing under exogenous longevity. We characterize also the Lifetime Golden Rule, that is, the capital per worker maximizing steady-state expected lifetime consumption per head, and show that this tends to exceed the standard Golden Rule capital level.

Author(s)

David de La Croix, Grégory Ponthière

Date of publication
  • 2008
Keywords JEL
E13 E21 E22 I12
Internal reference
  • PSE Working Papers n°2008-48
Version
  • 1