Public debt, voluntary intergenerational transfers and overlapping generations

This paper deals with the characterization of overlapping generations models with voluntary intergenerational transfers when altruism is one-sided. It is argued that the qualitative conclusions derived about debt neutrality do not depend on the way the intergenerational concern is modelled. With operative bequests (gifts), the steady-state interest rate is greater (less) than the population growth rate regardless of whether individuals have a concern about a representative descendant's (ancestor's) utility or the total welfare enjoyed by all their children (parents). When the criterion of total utility of the ancestors is adopted, their utility must not be discounted but compounded, since otherwise the model has no significant solution, although there must be effective discounting of a representative ancestor's utility. © 1989.